UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3114
Fidelity Select Portfolios
(Exact name of registrant as specified in charter)
245 Summer St., Boston, Massachusetts 02210
(Address of principal executive offices) (Zip code)
Marc Bryant, Secretary
245 Summer St.
Boston, Massachusetts 02210
(Name and address of agent for service)
Registrant's telephone number, including area code:
617-563-7000
Date of fiscal year end: | February 28 |
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Date of reporting period: | February 28, 2017 |
Item 1.
Reports to Stockholders
Fidelity Advisor Focus Funds® Fidelity Advisor® Consumer Staples Fund Fidelity Advisor® Gold Fund Fidelity Advisor® Materials Fund Fidelity Advisor® Telecommunications Fund Annual Report February 28, 2017 Each Advisor fund listed above is a class of the Fidelity® Select Portfolios® |
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Contents
Fidelity Advisor® Consumer Staples Fund | |
Fidelity Advisor® Gold Fund | |
Fidelity Advisor® Materials Fund | |
Fidelity Advisor® Telecommunications Fund | |
Board Approval of Investment Advisory Contracts and Management Fees |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-877-208-0098 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2017 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Funds. This report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Funds nor Fidelity Distributors Corporation is a bank.
Fidelity Advisor® Consumer Staples Fund
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Class A (incl. 5.75% sales charge) | 5.47% | 10.04% | 8.99% |
| Class T (incl. 3.50% sales charge) | 7.71% | 10.25% | 8.95% |
| Class C (incl. contingent deferred sales charge) | 10.07% | 10.52% | 8.82% |
| Class I | 12.22% | 11.63% | 9.93% |
Class C shares' contingent deferred sales charges included in the past one year, past five years and past ten years total return figures are 1%, 0% and 0%, respectively.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor® Consumer Staples Fund - Class A on February 28, 2007, and the current 5.75% sales charge was paid.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $23,651 | Fidelity Advisor® Consumer Staples Fund - Class A | |
| $20,834 | S&P 500® Index | |
Fidelity Advisor® Consumer Staples Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union –recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Robert Lee: For the year, the fund's share classes (excluding sales charges, if applicable) rose roughly 11% to 12%, compared with the 12.16% return of the MSCI sector index, and significantly lagging the broader S&P 500® index. Against stable global economic data and improving prices for energy and certain other commodities, consumer staples came up short of the broad market this period. In addition, Trump's election ignited investors' hopes of potential business-friendly reforms, along with their expectations for a rise in inflation. As a result, typically more-defensive areas of the market, including consumer staples, suffered amid a shift toward riskier assets. Versus the MSCI sector index, the fund’s largest relative detractors were sizable stakes in CVS Health and Kroger. Shares of pharmacy retailer and health care company CVS fell on downward earnings guidance, as the firm lost some large contracts to competitor Walgreens Boots Alliance – another large fund holding. Meanwhile, grocer Kroger also reduced its earnings estimates, as food deflation led to slower sales growth and less fixed-cost leverage, and as investors began to fear an acceleration in price competition within the food retail industry. Conversely, a non-index stake in U.K.-based British American Tobacco (BAT) was by far the fund’s biggest individual contributor and among its largest holdings. The stock returned 22% for the fund, partly helped by news in January that BAT would buy the remaining stake in competitor Reynolds American that it did not own, making it the world’s largest publicly traded tobacco company. Bunge, a producer of fertilizer, processed grains and soybeans, also was significantly additive. Favorable crop conditions in key markets increased earnings expectations for the global agribusiness and food company.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Consumer Staples Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Philip Morris International, Inc. | 11.7 | 4.1 |
| British American Tobacco PLC sponsored ADR | 11.6 | 10.9 |
| CVS Health Corp. | 8.4 | 9.2 |
| Kroger Co. | 6.0 | 6.2 |
| Reynolds American, Inc. | 5.2 | 4.8 |
| Altria Group, Inc. | 4.9 | 4.1 |
| The Coca-Cola Co. | 4.9 | 3.9 |
| Estee Lauder Companies, Inc. Class A | 4.8 | 0.8 |
| Procter & Gamble Co. | 3.9 | 12.3 |
| Colgate-Palmolive Co. | 3.8 | 2.7 |
| 65.2 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Tobacco | 33.8% | |
| Food & Staples Retailing | 17.6% | |
| Beverages | 16.6% | |
| Food Products | 10.4% | |
| Personal Products | 9.7% | |
| All Others* | 11.9% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Food & Staples Retailing | 24.9% | |
| Tobacco | 24.2% | |
| Beverages | 17.0% | |
| Household Products | 16.2% | |
| Food Products | 11.1% | |
| All Others* | 6.6% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Consumer Staples Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 97.7% | |||
| Shares | Value | ||
| Beverages - 16.4% | |||
| Brewers - 2.8% | |||
| Anheuser-Busch InBev SA NV | 670,590 | $73,353,629 | |
| China Resources Beer Holdings Co. Ltd. (a) | 3,468,000 | 7,871,563 | |
| 81,225,192 | |||
| Distillers & Vintners - 3.2% | |||
| Brown-Forman Corp. Class B (non-vtg.) | 195,168 | 9,516,392 | |
| Constellation Brands, Inc. Class A (sub. vtg.) | 213,600 | 33,921,816 | |
| Kweichow Moutai Co. Ltd. (A Shares) | 268,853 | 13,883,937 | |
| Pernod Ricard SA | 238,376 | 27,248,584 | |
| Wuliangye Yibin Co. Ltd. Class A | 1,314,309 | 7,570,757 | |
| 92,141,486 | |||
| Soft Drinks - 10.4% | |||
| Britvic PLC | 2,255,964 | 17,677,661 | |
| Coca-Cola Bottling Co. Consolidated | 150,638 | 25,920,281 | |
| Coca-Cola European Partners PLC | 47,700 | 1,654,713 | |
| Coca-Cola FEMSA S.A.B. de CV sponsored ADR | 64,529 | 4,235,038 | |
| Coca-Cola Icecek Sanayi A/S | 611,162 | 5,888,088 | |
| Embotelladora Andina SA Series A sponsored ADR Series A | 287,573 | 5,808,975 | |
| Monster Beverage Corp. (a) | 2,113,502 | 87,583,523 | |
| PepsiCo, Inc. | 68,800 | 7,594,144 | |
| The Coca-Cola Co. | 3,336,218 | 139,987,707 | |
| 296,350,130 | |||
| TOTAL BEVERAGES | 469,716,808 | ||
| Food & Staples Retailing - 17.6% | |||
| Drug Retail - 11.3% | |||
| CVS Health Corp. | 2,978,903 | 240,040,004 | |
| Drogasil SA (a) | 343,600 | 6,481,814 | |
| Rite Aid Corp. (a) | 1,031,800 | 6,190,800 | |
| Walgreens Boots Alliance, Inc. | 829,524 | 71,654,283 | |
| 324,366,901 | |||
| Food Retail - 6.0% | |||
| Kroger Co. | 5,395,670 | 171,582,306 | |
| Hypermarkets & Super Centers - 0.3% | |||
| Wal-Mart Stores, Inc. | 123,800 | 8,781,134 | |
| TOTAL FOOD & STAPLES RETAILING | 504,730,341 | ||
| Food Products - 10.4% | |||
| Agricultural Products - 2.7% | |||
| Bunge Ltd. | 944,844 | 77,335,481 | |
| Packaged Foods & Meats - 7.7% | |||
| Amplify Snack Brands, Inc. (a) | 284,938 | 2,855,079 | |
| Blue Buffalo Pet Products, Inc. (a) | 490,676 | 11,992,121 | |
| Mead Johnson Nutrition Co. Class A | 240,640 | 21,125,786 | |
| Mondelez International, Inc. | 1,379,358 | 60,581,403 | |
| Nestle SA | 231,912 | 17,114,683 | |
| The Hain Celestial Group, Inc. (a) | 1,191,666 | 42,161,143 | |
| TreeHouse Foods, Inc. (a) | 762,959 | 64,912,552 | |
| 220,742,767 | |||
| TOTAL FOOD PRODUCTS | 298,078,248 | ||
| Hotels, Restaurants & Leisure - 0.7% | |||
| Restaurants - 0.7% | |||
| U.S. Foods Holding Corp. | 737,016 | 20,304,791 | |
| Household Products - 9.1% | |||
| Household Products - 9.1% | |||
| Colgate-Palmolive Co. | 1,478,196 | 107,878,744 | |
| Kimberly-Clark Corp. | 145,466 | 19,281,518 | |
| Procter & Gamble Co. | 1,231,261 | 112,130,939 | |
| Spectrum Brands Holdings, Inc. (b) | 147,105 | 19,965,091 | |
| 259,256,292 | |||
| Personal Products - 9.7% | |||
| Personal Products - 9.7% | |||
| Avon Products, Inc. (a) | 2,634,800 | 11,593,120 | |
| Coty, Inc. Class A (b) | 4,174,597 | 78,398,932 | |
| Estee Lauder Companies, Inc. Class A | 1,652,639 | 136,921,141 | |
| Herbalife Ltd. (a) | 289,610 | 16,360,069 | |
| L'Oreal SA | 82,100 | 15,268,767 | |
| Unilever NV (Certificaten Van Aandelen) (Bearer) | 295,700 | 13,997,879 | |
| Unilever PLC sponsored ADR (b) | 108,400 | 5,146,832 | |
| 277,686,740 | |||
| Tobacco - 33.8% | |||
| Tobacco - 33.8% | |||
| Altria Group, Inc. | 1,877,045 | 140,628,211 | |
| British American Tobacco PLC sponsored ADR (b) | 5,187,692 | 331,182,257 | |
| ITC Ltd. | 2,461,847 | 9,673,980 | |
| Philip Morris International, Inc. | 3,065,591 | 335,222,374 | |
| Reynolds American, Inc. | 2,431,523 | 149,708,871 | |
| 966,415,693 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $2,136,570,932) | 2,796,188,913 | ||
| Nonconvertible Preferred Stocks - 0.2% | |||
| Beverages - 0.2% | |||
| Brewers - 0.2% | |||
| Ambev SA sponsored ADR | |||
| (Cost $4,208,238) | 1,079,010 | 6,139,567 | |
| Money Market Funds - 14.5% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 67,980,774 | 67,994,370 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 345,125,337 | 345,194,362 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $413,159,142) | 413,188,732 | ||
| TOTAL INVESTMENT PORTFOLIO - 112.4% | |||
| (Cost $2,553,938,312) | 3,215,517,212 | ||
| NET OTHER ASSETS (LIABILITIES) - (12.4)% | (354,007,815) | ||
| NET ASSETS - 100% | $2,861,509,397 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $259,718 |
| Fidelity Securities Lending Cash Central Fund | 1,515,619 |
| Total | $1,775,337 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $2,796,188,913 | $2,685,240,908 | $110,948,005 | $-- |
| Nonconvertible Preferred Stocks | 6,139,567 | 6,139,567 | -- | -- |
| Money Market Funds | 413,188,732 | 413,188,732 | -- | -- |
| Total Investments in Securities: | $3,215,517,212 | $3,104,569,207 | $110,948,005 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 76.8% |
| United Kingdom | 12.5% |
| Bermuda | 2.7% |
| Belgium | 2.5% |
| France | 1.4% |
| Others (Individually Less Than 1%) | 4.1% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Consumer Staples Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $336,402,757) — See accompanying schedule: Unaffiliated issuers (cost $2,140,779,170) | $2,802,328,480 | |
| Fidelity Central Funds (cost $413,159,142) | 413,188,732 | |
| Total Investments (cost $2,553,938,312) | $3,215,517,212 | |
| Receivable for investments sold | 1,470,144 | |
| Receivable for fund shares sold | 7,125,395 | |
| Dividends receivable | 3,442,599 | |
| Distributions receivable from Fidelity Central Funds | 494,426 | |
| Prepaid expenses | 12,955 | |
| Other receivables | 172,464 | |
| Total assets | 3,228,235,195 | |
| Liabilities | ||
| Payable to custodian bank | $147 | |
| Payable for investments purchased | 12,917,380 | |
| Payable for fund shares redeemed | 5,656,387 | |
| Accrued management fee | 1,282,517 | |
| Distribution and service plan fees payable | 399,595 | |
| Other affiliated payables | 499,023 | |
| Other payables and accrued expenses | 796,673 | |
| Collateral on securities loaned | 345,174,076 | |
| Total liabilities | 366,725,798 | |
| Net Assets | $2,861,509,397 | |
| Net Assets consist of: | ||
| Paid in capital | $2,161,673,906 | |
| Undistributed net investment income | 4,801,401 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 34,120,683 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 660,913,407 | |
| Net Assets | $2,861,509,397 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($522,014,431 ÷ 5,427,232 shares) | $96.18 | |
| Maximum offering price per share (100/94.25 of $96.18) | $102.05 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($89,924,874 ÷ 942,418 shares) | $95.42 | |
| Maximum offering price per share (100/96.50 of $95.42) | $98.88 | |
| Class C: | ||
| Net Asset Value and offering price per share ($308,350,291 ÷ 3,284,096 shares)(a) | $93.89 | |
| Consumer Staples: | ||
| Net Asset Value, offering price and redemption price per share ($1,665,603,660 ÷ 17,170,009 shares) | $97.01 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($275,616,141 ÷ 2,846,783 shares) | $96.82 |
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $74,847,125 | |
| Income from Fidelity Central Funds | 1,775,337 | |
| Total income | 76,622,462 | |
| Expenses | ||
| Management fee | $17,449,594 | |
| Transfer agent fees | 5,832,031 | |
| Distribution and service plan fees | 4,855,574 | |
| Accounting and security lending fees | 951,646 | |
| Custodian fees and expenses | 90,578 | |
| Independent trustees' fees and expenses | 70,084 | |
| Registration fees | 222,336 | |
| Audit | 57,796 | |
| Legal | 45,597 | |
| Interest | 3,438 | |
| Miscellaneous | 41,607 | |
| Total expenses before reductions | 29,620,281 | |
| Expense reductions | (283,563) | 29,336,718 |
| Net investment income (loss) | 47,285,744 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 132,377,339 | |
| Redemptions in-kind with affiliated entities | 85,065,706 | |
| Fidelity Central Funds | (7,690) | |
| Foreign currency transactions | (102,855) | |
| Total net realized gain (loss) | 217,332,500 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $618,798) | 57,306,523 | |
| Assets and liabilities in foreign currencies | 1,526 | |
| Total change in net unrealized appreciation (depreciation) | 57,308,049 | |
| Net gain (loss) | 274,640,549 | |
| Net increase (decrease) in net assets resulting from operations | $321,926,293 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $47,285,744 | $45,297,947 |
| Net realized gain (loss) | 217,332,500 | 141,211,479 |
| Change in net unrealized appreciation (depreciation) | 57,308,049 | (292,128,539) |
| Net increase (decrease) in net assets resulting from operations | 321,926,293 | (105,619,113) |
| Distributions to shareholders from net investment income | (44,327,157) | (42,428,021) |
| Distributions to shareholders from net realized gain | (82,139,579) | (202,474,580) |
| Total distributions | (126,466,736) | (244,902,601) |
| Share transactions - net increase (decrease) | (395,070,237) | 299,448,347 |
| Redemption fees | 44,026 | 52,041 |
| Total increase (decrease) in net assets | (199,566,654) | (51,021,326) |
| Net Assets | ||
| Beginning of period | 3,061,076,051 | 3,112,097,377 |
| End of period | $2,861,509,397 | $3,061,076,051 |
| Other Information | ||
| Undistributed net investment income end of period | $4,801,401 | $4,626,720 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Consumer Staples Portfolio Class A
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $89.78 | $101.33 | $87.93 | $85.67 | $74.90 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.28 | 1.34 | 1.37 | 1.43 | 1.26 |
| Net realized and unrealized gain (loss) | 9.12 | (4.86) | 17.28 | 7.51 | 11.73 |
| Total from investment operations | 10.40 | (3.52) | 18.65 | 8.94 | 12.99 |
| Distributions from net investment income | (1.37) | (1.31) | (1.28) | (1.44) | (1.08) |
| Distributions from net realized gain | (2.64) | (6.72) | (3.98) | (5.24) | (1.14) |
| Total distributions | (4.00)C | (8.03) | (5.25)D | (6.68) | (2.22) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $96.18 | $89.78 | $101.33 | $87.93 | $85.67 |
| Total ReturnF,G | 11.91% | (3.51)% | 21.95% | 10.53% | 17.60% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.04% | 1.04% | 1.05% | 1.06% | 1.08% |
| Expenses net of fee waivers, if any | 1.04% | 1.04% | 1.05% | 1.06% | 1.08% |
| Expenses net of all reductions | 1.03% | 1.04% | 1.05% | 1.06% | 1.08% |
| Net investment income (loss) | 1.37% | 1.45% | 1.45% | 1.61% | 1.58% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $522,014 | $470,249 | $414,151 | $329,459 | $277,329 |
| Portfolio turnover rateJ | 56%K | 63% | 42%K | 31% | 28% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $4.00 per share is comprised of distributions from net investment income of $1.365 and distributions from net realized gain of $2.636 per share.
D Total distributions of $5.25 per share is comprised of distributions from net investment income of $1.275 and distributions from net realized gain of $3.976 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Total returns do not include the effect of the sales charges.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Consumer Staples Portfolio Class T
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $89.10 | $100.61 | $87.37 | $85.18 | $74.49 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.01 | 1.08 | 1.10 | 1.18 | 1.03 |
| Net realized and unrealized gain (loss) | 9.07 | (4.83) | 17.15 | 7.46 | 11.68 |
| Total from investment operations | 10.08 | (3.75) | 18.25 | 8.64 | 12.71 |
| Distributions from net investment income | (1.12) | (1.04) | (1.04) | (1.21) | (.88) |
| Distributions from net realized gain | (2.64) | (6.72) | (3.98) | (5.24) | (1.14) |
| Total distributions | (3.76) | (7.76) | (5.01)C | (6.45) | (2.02) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $95.42 | $89.10 | $100.61 | $87.37 | $85.18 |
| Total ReturnE,F | 11.61% | (3.78)% | 21.60% | 10.23% | 17.29% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | 1.32% | 1.32% | 1.32% | 1.33% | 1.36% |
| Expenses net of fee waivers, if any | 1.32% | 1.32% | 1.32% | 1.33% | 1.36% |
| Expenses net of all reductions | 1.31% | 1.31% | 1.32% | 1.33% | 1.35% |
| Net investment income (loss) | 1.09% | 1.17% | 1.18% | 1.34% | 1.30% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $89,925 | $76,586 | $81,489 | $61,421 | $52,024 |
| Portfolio turnover rateI | 56%J | 63% | 42%J | 31% | 28% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $5.01 per share is comprised of distributions from net investment income of $1.036 and distributions from net realized gain of $3.976 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Total returns do not include the effect of the sales charges.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Consumer Staples Portfolio Class C
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $87.77 | $99.27 | $86.32 | $84.28 | $73.75 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .56 | .63 | .65 | .75 | .65 |
| Net realized and unrealized gain (loss) | 8.92 | (4.75) | 16.93 | 7.36 | 11.55 |
| Total from investment operations | 9.48 | (4.12) | 17.58 | 8.11 | 12.20 |
| Distributions from net investment income | (.73) | (.65) | (.65) | (.84) | (.53) |
| Distributions from net realized gain | (2.64) | (6.72) | (3.98) | (5.24) | (1.14) |
| Total distributions | (3.36)C | (7.38)D | (4.63) | (6.07)E | (1.67) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $93.89 | $87.77 | $99.27 | $86.32 | $84.28 |
| Total ReturnG,H | 11.07% | (4.23)% | 21.03% | 9.70% | 16.73% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | 1.80% | 1.80% | 1.80% | 1.82% | 1.83% |
| Expenses net of fee waivers, if any | 1.79% | 1.80% | 1.80% | 1.82% | 1.83% |
| Expenses net of all reductions | 1.79% | 1.79% | 1.80% | 1.81% | 1.82% |
| Net investment income (loss) | .61% | .69% | .70% | .85% | .83% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $308,350 | $250,576 | $228,151 | $164,669 | $134,966 |
| Portfolio turnover rateK | 56%L | 63% | 42%L | 31% | 28% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $3.36 per share is comprised of distributions from net investment income of $.726 and distributions from net realized gain of $2.636 per share.
D Total distributions of $7.38 per share is comprised of distributions from net investment income of $.651 and distributions from net realized gain of $6.724 per share.
E Total distributions of $6.07 per share is comprised of distributions from net investment income of $.837 and distributions from net realized gain of $5.237 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Total returns do not include the effect of the contingent deferred sales charge.
I Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
L Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Consumer Staples Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $90.48 | $102.03 | $88.51 | $86.17 | $75.29 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.56 | 1.61 | 1.64 | 1.69 | 1.48 |
| Net realized and unrealized gain (loss) | 9.20 | (4.89) | 17.40 | 7.55 | 11.82 |
| Total from investment operations | 10.76 | (3.28) | 19.04 | 9.24 | 13.30 |
| Distributions from net investment income | (1.60) | (1.55) | (1.54) | (1.66) | (1.28) |
| Distributions from net realized gain | (2.64) | (6.72) | (3.98) | (5.24) | (1.14) |
| Total distributions | (4.23)C | (8.27) | (5.52) | (6.90) | (2.42) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $97.01 | $90.48 | $102.03 | $88.51 | $86.17 |
| Total ReturnE | 12.24% | (3.25)% | 22.27% | 10.82% | 17.94% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .76% | .77% | .77% | .79% | .81% |
| Expenses net of fee waivers, if any | .76% | .77% | .77% | .79% | .81% |
| Expenses net of all reductions | .76% | .76% | .77% | .79% | .80% |
| Net investment income (loss) | 1.64% | 1.72% | 1.73% | 1.88% | 1.85% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,665,604 | $2,039,983 | $2,173,970 | $1,328,594 | $1,425,055 |
| Portfolio turnover rateH | 56%I | 63% | 42%I | 31% | 28% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $4.23 per share is comprised of distributions from net investment income of $1.596 and distributions from net realized gain of $2.636 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Consumer Staples Portfolio Class I
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $90.34 | $101.91 | $88.33 | $85.92 | $75.14 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.54 | 1.60 | 1.59 | 1.66 | 1.45 |
| Net realized and unrealized gain (loss) | 9.19 | (4.89) | 17.40 | 7.53 | 11.79 |
| Total from investment operations | 10.73 | (3.29) | 18.99 | 9.19 | 13.24 |
| Distributions from net investment income | (1.61) | (1.55) | (1.44) | (1.54) | (1.32) |
| Distributions from net realized gain | (2.64) | (6.72) | (3.98) | (5.24) | (1.14) |
| Total distributions | (4.25) | (8.28)C | (5.41)D | (6.78) | (2.46) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $96.82 | $90.34 | $101.91 | $88.33 | $85.92 |
| Total ReturnF | 12.22% | (3.26)% | 22.26% | 10.80% | 17.90% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .78% | .78% | .80% | .82% | .85% |
| Expenses net of fee waivers, if any | .78% | .77% | .80% | .82% | .85% |
| Expenses net of all reductions | .77% | .77% | .80% | .82% | .84% |
| Net investment income (loss) | 1.63% | 1.71% | 1.70% | 1.85% | 1.81% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $275,616 | $216,836 | $198,538 | $154,271 | $378,731 |
| Portfolio turnover rateI | 56%J | 63% | 42%J | 31% | 28% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $8.28 per share is comprised of distributions from net investment income of $1.553 and distributions from net realized gain of $6.724 per share.
D Total distributions of $5.41 per share is comprised of distributions from net investment income of $1.436 and distributions from net realized gain of $3.976 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2017
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Consumer Staples and Class I shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class.
After the close of business on June 24, 2016, all outstanding Class B shares were converted to Class A shares. All current fiscal period dollar and share amounts for Class B presented in the Notes to Financial Statements are for the period March 1, 2016 through June 24, 2016.
In March 2017, the Board of Trustees approved a change in the name of Class T to Class M effective after the close of business on March 24, 2017.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds ,including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 28, 2017 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Fund represent a return of capital or capital gain. The Fund determines the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2017, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. The Fund is subject to a tax imposed on capital gains by certain countries in which it invests. An estimated deferred tax liability for net unrealized appreciation on the applicable securities is included in Other payables and accrued expenses on the Statement of Assets & Liabilities.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $700,011,718 |
| Gross unrealized depreciation | (43,745,466) |
| Net unrealized appreciation (depreciation) on securities | $656,266,252 |
| Tax Cost | $2,559,250,960 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $4,923,518 |
| Undistributed long-term capital gain | $39,433,331 |
| Net unrealized appreciation (depreciation) on securities and other investments | $656,219,557 |
The tax character of distributions paid was as follows:
| February 28, 2017 | February 29, 2016 | |
| Ordinary Income | $67,916,475 | $ 74,502,566 |
| Long-term Capital Gains | 58,550,261 | 170,400,035 |
| Total | $126,466,736 | $ 244,902,601 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital. In November 2016, the Board of Trustees approved the elimination of these redemption fees effective December 12, 2016.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securites and in-kind transactions, aggregated $1,728,107,751 and $1,942,329,048, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .25 % during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution Fee | Service Fee | Total Fees | Retained by FDC | |
| Class A | -% | .25% | $1,339,266 | $– |
| Class T | .25% | .25% | 436,934 | – |
| Class B | .75% | .25% | 18,669 | 14,002 |
| Class C | .75% | .25% | 3,060,705 | 786,573 |
| $4,855,574 | $800,575 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $454,705 |
| Class T | 51,077 |
| Class B(a) | 19 |
| Class C(a) | 51,246 |
| $557,047 |
(a) When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc., (FIIOC), an affiliate of the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $1,074,330 | .20 |
| Class T | 198,886 | .23 |
| Class B | 4,085 | .22 |
| Class C | 619,029 | .20 |
| Consumer Staples | 3,384,602 | .17 |
| Class I | 551,099 | .19 |
| $5,832,031 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $30,116 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense |
| Borrower | $7,265,050 | .74% | $2,995 |
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Redemptions In-Kind. During the period, 2,230,314 shares of the Fund held by an affiliated entity were redeemed in-kind for investments and cash with a value of $205,991,818. The net realized gain of $85,065,706 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 11: Share Transactions. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $9,764 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $1,515,619.
8. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average loan balance during the period for which loans were outstanding amounted to $2,290,333. The weighted average interest rate was 1.16%. The interest expense amounted to $443 under the bank borrowing program. At period end, there were no bank borrowings outstanding.
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $256,302 for the period.
Through arrangements with the Fund's custodian, credits realized as a result of certain uninvested cash balances were used to reduce the Fund's expense. During the period, these credits reduced the Fund's custody expense by $3,219.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $24,042.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| From net investment income | ||
| Class A | $7,577,410 | $5,892,374 |
| Class T | 1,043,893 | 832,225 |
| Class B | – | 21,356 |
| Class C | 2,453,649 | 1,681,417 |
| Consumer Staples | 28,450,076 | 30,907,531 |
| Class I | 4,802,129 | 3,093,118 |
| Total | $44,327,157 | $42,428,021 |
| From net realized gain | ||
| Class A | $14,585,099 | $29,492,766 |
| Class T | 2,440,856 | 5,430,950 |
| Class B | 38,559 | 809,700 |
| Class C | 8,724,413 | 16,753,262 |
| Consumer Staples | 48,589,839 | 136,504,977 |
| Class I | 7,760,813 | 13,482,925 |
| Total | $82,139,579 | $202,474,580 |
11. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
| Shares | Shares | Dollars | Dollars | |
| Year ended February 28, 2017 | Year ended February 29, 2016 | Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Class A | ||||
| Shares sold | 2,074,631 | 1,973,363 | $195,949,659 | $181,606,150 |
| Reinvestment of distributions | 237,892 | 372,764 | 21,465,950 | 34,290,264 |
| Shares redeemed | (2,123,267) | (1,195,463) | (197,828,865) | (110,798,612) |
| Net increase (decrease) | 189,256 | 1,150,664 | $19,586,744 | $105,097,802 |
| Class T | ||||
| Shares sold | 258,361 | 197,944 | $24,169,768 | $18,205,532 |
| Reinvestment of distributions | 37,389 | 66,110 | 3,349,216 | 6,055,600 |
| Shares redeemed | (212,844) | (214,470) | (19,792,973) | (19,884,944) |
| Net increase (decrease) | 82,906 | 49,584 | $7,726,011 | $4,376,188 |
| Class B | ||||
| Shares sold | 1,629 | 4,002 | $151,958 | $364,996 |
| Reinvestment of distributions | 379 | 8,400 | 35,399 | 777,774 |
| Shares redeemed | (78,913) | (93,279) | (7,397,851) | (8,496,255) |
| Net increase (decrease) | (76,905) | (80,877) | $(7,210,494) | $(7,353,485) |
| Class C | ||||
| Shares sold | 1,245,446 | 926,964 | $115,155,143 | $84,032,895 |
| Reinvestment of distributions | 115,157 | 181,545 | 10,152,865 | 16,369,686 |
| Shares redeemed | (931,585) | (551,638) | (84,513,838) | (49,873,026) |
| Net increase (decrease) | 429,018 | 556,871 | $40,794,170 | $50,529,555 |
| Consumer Staples | ||||
| Shares sold | 4,086,473 | 5,277,258 | $389,479,615 | $487,809,315 |
| Reinvestment of distributions | 801,941 | 1,736,133 | 73,103,322 | 161,200,153 |
| Shares redeemed | (10,263,589)(a) | (5,774,399) | (963,924,332)(a) | (543,103,364) |
| Net increase (decrease) | (5,375,175) | 1,238,992 | $(501,341,395) | $105,906,104 |
| Class I | ||||
| Shares sold | 2,282,645 | 1,318,941 | $217,344,361 | $121,982,188 |
| Reinvestment of distributions | 121,641 | 148,325 | 11,031,386 | 13,734,363 |
| Shares redeemed | (1,957,632) | (1,015,396) | (183,001,020) | (94,824,368) |
| Net increase (decrease) | 446,654 | 451,870 | $45,374,727 | $40,892,183 |
(a) Amount includes in-kind redemptions (see Note 5: Redemptions In-Kind)
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Fidelity Advisor® Gold Fund
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Class A (incl. 5.75% sales charge) | 13.07% | (15.10)% | (3.06)% |
| Class T (incl. 3.50% sales charge) | 15.43% | (14.94)% | (3.08)% |
| Class C (incl. contingent deferred sales charge) | 18.19% | (14.71)% | (3.20)% |
| Class I | 20.41% | (13.80)% | (2.17)% |
Class C shares' contingent deferred sales charges included in the past one year, past five years and past ten years total return figures are 1%, 0% and 0%, respectively.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor® Gold Fund - Class A on February 28, 2007, and the current 5.75% sales charge was paid.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $7,331 | Fidelity Advisor® Gold Fund - Class A | |
| $20,834 | S&P 500® Index | |
Fidelity Advisor® Gold Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager S. Joseph Wickwire II, CFA: For the year, most of the fund's share classes (excluding sales charges, if applicable) rose roughly 20%, underperforming the 21.88% return of the S&P® Global BMI Gold Capped Index, and falling short of the broad-based S&P 500®. It was a volatile year for gold and gold stocks. Both rallied in the first half of the fiscal year against a global backdrop of below-average economic growth, negative real interest rates, currency debasement and increasing political tension. After August, gold markets reversed course, falling steeply after Trump's election on expectations of a stronger dollar and higher interest rates. The asset class hit bottom in late December, and appearing oversold, then rebounded a bit through the end of February 2017. The commodity price finished flat for the year, however. Versus the S&P industry benchmark, the fund's biggest detractor by far was its non-index stake in bullion, with a 9% weighting, on average. I've tactically used gold and silver bullion for price exposure and liquidity reasons, but in the period's second half, gold-related equities gained favor among investors, hurting our bullion position. Among individual stocks, detractors included names we overweighted that underperformed, including Detour Gold and New Gold. These firms stuggled with operational execution. Another contributor, Premier Gold Mines, executed well but failed to attract investment interest, which caused it to underperform. Conversely, the fund was helped by overweighting names that significantly outperformed, such as B2Gold, the fund's biggest relative contributor by far. B2 executed well, made significant progress in key projects, and did not need to raise capital as the market anticipated. The stock returned 175% for the fund this year. Other contributors included Continental Gold and Torex Gold. All three stayed focused on their project pipelines and benefited from an improved gold environment in the period's first half.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On April 1, 2017, the fund’s industry benchmark will change from the S&P® Global BMI Gold Capped Index (a custom index developed for Fidelity) to S&P® Global BMI Gold Capped 20/45 Index (a public benchmark that became available more recently). Due to new international benchmark guidelines, S&P® Dow Jones® Indices has decided to stop offering its brand on custom benchmarks, effective March 31, 2017. Fidelity believes that the new S&P® index will continue to provide shareholders with meaningful performance comparisons.Gold Portfolio
Consolidated Investment Summary (Unaudited)
The information in the following tables is based on the consolidated investments of the Fund.Top Ten Holdings as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Randgold Resources Ltd. sponsored ADR | 8.2 | 6.5 |
| Barrick Gold Corp. | 7.6 | 5.8 |
| Newmont Mining Corp. | 6.9 | 7.6 |
| Agnico Eagle Mines Ltd. (Canada) | 6.0 | 6.4 |
| B2Gold Corp. | 5.7 | 3.8 |
| Franco-Nevada Corp. | 5.3 | 5.3 |
| Newcrest Mining Ltd. | 4.5 | 5.4 |
| Silver Bullion | 4.0 | 4.8 |
| Goldcorp, Inc. | 3.8 | 3.2 |
| Torex Gold Resources, Inc. | 3.3 | 3.0 |
| 55.3 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Gold | 90.5% | |
| Commodities & Related Investments* | 5.7% | |
| Precious Metals & Minerals | 1.0% | |
| Silver | 1.0% | |
| Diversified Metals & Mining | 0.8% | |
| Copper | 0.3% | |
| All Others** | 0.7% | |
* Includes gold bullion and/or silver bullion.
** Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Gold | 87.8% | |
| Commodities & Related Investments* | 9.4% | |
| Precious Metals & Minerals | 1.2% | |
| Silver | 1.2% | |
| Diversified Metals & Mining | 0.4% | |
* Includes gold bullion and/or silver bullion.
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Geographic Diversification (% of fund's net assets)
| As of February 28, 2017 | ||
| Canada | 59.8% | |
| United States of America* | 16.3% | |
| Bailiwick of Jersey | 8.3% | |
| Australia | 6.2% | |
| South Africa | 4.8% | |
| United Kingdom | 2.1% | |
| Cayman Islands | 1.2% | |
| Peru | 1.0% | |
| China | 0.3% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.
| As of August 31, 2016 | ||
| Canada | 55.7% | |
| United States of America* | 20.0% | |
| Australia | 7.7% | |
| Bailiwick of Jersey | 6.5% | |
| South Africa | 5.9% | |
| United Kingdom | 1.4% | |
| Peru | 1.0% | |
| Cayman Islands | 0.8% | |
| China | 0.6% | |
| Other | 0.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.
Gold Portfolio
Consolidated Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 93.6% | |||
| Shares | Value | ||
| Australia - 6.2% | |||
| Metals & Mining - 6.2% | |||
| Gold - 6.2% | |||
| Evolution Mining Ltd. | 2,641,243 | $4,374,089 | |
| Gold Road Resources Ltd. (a) | 1,080,000 | 438,859 | |
| Newcrest Mining Ltd. | 4,118,268 | 69,906,520 | |
| Northern Star Resources Ltd. | 1,278,118 | 4,105,920 | |
| Perseus Mining Ltd.: | |||
| (Australia) (a) | 1,717,134 | 408,123 | |
| (Canada) (a) | 1,300,000 | 313,206 | |
| Resolute Mng Ltd. | 3,125,161 | 3,857,658 | |
| Saracen Mineral Holdings Ltd. (a) | 8,122,787 | 6,788,237 | |
| Silver Lake Resources Ltd. (a) | 3,205,985 | 1,634,589 | |
| St Barbara Ltd. (a) | 1,847,257 | 3,597,382 | |
| 95,424,583 | |||
| Bailiwick of Jersey - 8.3% | |||
| Metals & Mining - 8.3% | |||
| Diversified Metals & Mining - 0.1% | |||
| Glencore Xstrata PLC (a) | 416,400 | 1,664,000 | |
| Gold - 8.2% | |||
| Randgold Resources Ltd. sponsored ADR | 1,371,295 | 125,761,466 | |
| TOTAL METALS & MINING | 127,425,466 | ||
| Canada - 59.8% | |||
| Metals & Mining - 59.8% | |||
| Copper - 0.3% | |||
| First Quantum Minerals Ltd. | 382,700 | 3,982,016 | |
| Diversified Metals & Mining - 0.4% | |||
| Arizona Mining, Inc. (a)(b) | 622,900 | 1,313,146 | |
| Ivanhoe Mines Ltd. (a) | 1,708,400 | 4,952,070 | |
| 6,265,216 | |||
| Gold - 57.5% | |||
| Agnico Eagle Mines Ltd. (Canada) | 2,188,601 | 92,029,337 | |
| Alacer Gold Corp. (a) | 1,623,663 | 3,105,032 | |
| Alamos Gold, Inc. | 2,655,487 | 19,213,394 | |
| Argonaut Gold, Inc. (a) | 6,308,462 | 9,879,236 | |
| B2Gold Corp. (a) | 28,385,793 | 87,196,232 | |
| Barrick Gold Corp. | 6,357,669 | 117,321,538 | |
| Belo Sun Mining Corp. (a) | 59,800 | 43,222 | |
| Centerra Gold, Inc. | 647,000 | 3,122,474 | |
| Continental Gold, Inc. (a)(c) | 7,770,400 | 26,033,941 | |
| Detour Gold Corp. (a) | 2,636,900 | 32,876,874 | |
| Detour Gold Corp. (a)(d) | 785,900 | 9,798,603 | |
| Eldorado Gold Corp. | 9,290,935 | 28,400,238 | |
| Franco-Nevada Corp. | 1,256,100 | 80,962,747 | |
| Goldcorp, Inc. | 3,675,700 | 58,254,393 | |
| Guyana Goldfields, Inc. (a) | 4,378,400 | 22,317,247 | |
| Guyana Goldfields, Inc. (a)(d) | 155,000 | 790,054 | |
| Integra Gold Corp. (a) | 1,664,500 | 952,432 | |
| Kinross Gold Corp. (a) | 2,825,391 | 9,955,451 | |
| Kirkland Lake Gold Ltd. (a) | 1,131,919 | 8,096,093 | |
| Klondex Mines Ltd. (a) | 603,600 | 3,203,870 | |
| Lundin Gold, Inc. (a) | 1,000 | 4,111 | |
| New Gold, Inc. (a) | 10,245,675 | 29,544,448 | |
| Novagold Resources, Inc. (a) | 1,747,700 | 9,237,204 | |
| OceanaGold Corp. | 9,921,932 | 28,162,689 | |
| Osisko Gold Royalties Ltd. | 1,105,993 | 12,124,121 | |
| Pilot Gold, Inc. (a) | 1,418,150 | 565,893 | |
| Premier Gold Mines Ltd. (a)(c) | 15,325,622 | 29,885,078 | |
| Pretium Resources, Inc. (a) | 1,652,083 | 16,754,674 | |
| Pretium Resources, Inc. (a)(d) | 225,000 | 2,281,848 | |
| Primero Mining Corp. (a) | 1,812,100 | 1,159,679 | |
| Richmont Mines, Inc. (a) | 702,843 | 5,482,197 | |
| Rubicon Minerals Corp. (a) | 1,000 | 1,506 | |
| Sandstorm Gold Ltd. (a) | 1,506,475 | 6,317,622 | |
| Seabridge Gold, Inc. (a) | 1,405,890 | 14,340,078 | |
| SEMAFO, Inc. (a) | 6,750,700 | 20,686,153 | |
| Silver Standard Resources, Inc. (a) | 581,200 | 6,441,247 | |
| Tahoe Resources, Inc. | 2,985,938 | 25,313,704 | |
| Teranga Gold Corp. (a) | 1,230,000 | 805,677 | |
| Teranga Gold Corp. CDI unit (a) | 3,338,072 | 2,252,184 | |
| Timmins Gold Corp. (a) | 371,500 | 142,648 | |
| Torex Gold Resources, Inc. (a) | 2,646,400 | 51,206,505 | |
| Yamana Gold, Inc. | 3,225,620 | 8,912,833 | |
| 885,174,507 | |||
| Precious Metals & Minerals - 0.6% | |||
| Dalradian Resources, Inc. (a) | 415,700 | 384,965 | |
| Gold Standard Ventures Corp. (a) | 2,724,500 | 7,076,890 | |
| Osisko Mining, Inc. (a)(b) | 778,900 | 2,134,615 | |
| 9,596,470 | |||
| Silver - 1.0% | |||
| MAG Silver Corp. (a) | 352,600 | 5,070,516 | |
| Silver Wheaton Corp. | 556,600 | 10,841,170 | |
| 15,911,686 | |||
| TOTAL METALS & MINING | 920,929,895 | ||
| Cayman Islands - 1.2% | |||
| Metals & Mining - 1.2% | |||
| Gold - 1.2% | |||
| Endeavour Mining Corp. (a) | 997,240 | 18,612,844 | |
| China - 0.3% | |||
| Metals & Mining - 0.3% | |||
| Gold - 0.3% | |||
| Zijin Mng Group Co. Ltd. (H Shares) | 11,240,000 | 4,242,384 | |
| Mexico - 0.0% | |||
| Metals & Mining - 0.0% | |||
| Precious Metals & Minerals - 0.0% | |||
| Industrias Penoles SA de CV | 8,518 | 202,365 | |
| Peru - 1.0% | |||
| Metals & Mining - 1.0% | |||
| Gold - 1.0% | |||
| Compania de Minas Buenaventura SA sponsored ADR | 1,313,928 | 16,161,314 | |
| South Africa - 4.8% | |||
| Metals & Mining - 4.8% | |||
| Gold - 4.8% | |||
| AngloGold Ashanti Ltd. sponsored ADR (a) | 3,651,408 | 40,238,516 | |
| DRDGOLD Ltd. sponsored ADR | 1,000 | 5,230 | |
| Gold Fields Ltd. sponsored ADR | 4,729,426 | 14,613,926 | |
| Harmony Gold Mining Co. Ltd. | 1,484,000 | 3,598,689 | |
| Harmony Gold Mining Co. Ltd. sponsored ADR | 1,585,400 | 3,963,500 | |
| Sibanye Gold Ltd. ADR | 1,325,306 | 10,748,232 | |
| 73,168,093 | |||
| United Kingdom - 2.1% | |||
| Metals & Mining - 2.1% | |||
| Diversified Metals & Mining - 0.3% | |||
| Rio Tinto PLC | 101,900 | 4,176,493 | |
| Gold - 1.4% | |||
| Acacia Mining PLC | 3,331,536 | 22,157,899 | |
| Pan African Resources PLC | 230,000 | 47,090 | |
| 22,204,989 | |||
| Precious Metals & Minerals - 0.4% | |||
| Fresnillo PLC | 363,000 | 6,693,368 | |
| TOTAL METALS & MINING | 33,074,850 | ||
| United States of America - 9.9% | |||
| Metals & Mining - 9.9% | |||
| Gold - 9.9% | |||
| McEwen Mining, Inc. | 939,010 | 3,220,804 | |
| Newmont Mining Corp. | 3,080,200 | 105,466,048 | |
| Royal Gold, Inc. | 660,413 | 43,620,279 | |
| 152,307,131 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $1,369,430,408) | 1,441,548,925 | ||
| Troy Ounces | |||
| Commodities - 5.7% | |||
| Gold Bullion (a) | 21,510 | 26,915,033 | |
| Silver Bullion (a) | 3,322,000 | 60,923,819 | |
| TOTAL COMMODITIES | |||
| (Cost $80,077,110) | 87,838,852 | ||
| Shares | Value | ||
| Money Market Funds - 1.1% | |||
| Fidelity Cash Central Fund, 0.60% (e) | 15,759,747 | 15,762,899 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (e)(f) | 1,081,568 | 1,081,785 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $16,844,672) | 16,844,684 | ||
| TOTAL INVESTMENT PORTFOLIO - 100.4% | |||
| (Cost $1,466,352,190) | 1,546,232,461 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.4)% | (6,128,124) | ||
| NET ASSETS - 100% | $1,540,104,337 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated company
(d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $12,870,505 or 0.8% of net assets.
(e) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(f) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $69,522 |
| Fidelity Securities Lending Cash Central Fund | 10,665 |
| Total | $80,187 |
Consolidated Subsidiary
| Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, end of period |
| Fidelity Select Cayman Gold Ltd. | $185,320,085 | $92,173,835 | $200,298,268 | $-- | $87,787,763 |
Other Affiliated Issuers
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:
| Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, end of period |
| Continental Gold, Inc. | $7,779,166 | $2,177,205 | $742,920 | $-- | $26,033,941 |
| Premier Gold Mines Ltd. | 25,711,502 | 11,220,829 | -- | -- | 29,885,078 |
| Total | $33,490,668 | $13,398,034 | $742,920 | $-- | $55,919,019 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Consolidated Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | �� | |||
| Common Stocks | $1,441,548,925 | $1,433,773,743 | $7,775,182 | $-- |
| Commodities | 87,838,852 | 87,838,852 | -- | -- |
| Money Market Funds | 16,844,684 | 16,844,684 | -- | -- |
| Total Investments in Securities: | $1,546,232,461 | $1,538,457,279 | $7,775,182 | $-- |
The following is a summary of transfers between Level 1 and Level 2 for the period ended February 28, 2017. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Consolidated Financial Statements:
| Transfers | Total |
| Level 1 to Level 2 | $0 |
| Level 2 to Level 1 | $72,999,912 |
See accompanying notes which are an integral part of the consolidated financial statements.
Gold Portfolio
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $1,186,039) — See accompanying schedule: Unaffiliated issuers (cost $1,300,354,005) | $1,385,629,906 | |
| Fidelity Central Funds (cost $16,844,672) | 16,844,684 | |
| Commodities (cost $80,077,110) | 87,838,852 | |
| Other affiliated issuers (cost $69,076,403) | 55,919,019 | |
| Total Investments (cost $1,466,352,190) | $1,546,232,461 | |
| Cash | 8,950 | |
| Foreign currency held at value (cost $114,029) | 114,029 | |
| Receivable for fund shares sold | 3,691,431 | |
| Dividends receivable | 505,820 | |
| Distributions receivable from Fidelity Central Funds | 15,268 | |
| Prepaid expenses | 7,881 | |
| Other receivables | 77,802 | |
| Total assets | 1,550,653,642 | |
| Liabilities | ||
| Payable for investments purchased | $677,067 | |
| Payable for fund shares redeemed | 7,396,301 | |
| Accrued management fee | 758,073 | |
| Distribution and service plan fees payable | 120,136 | |
| Other affiliated payables | 341,617 | |
| Other payables and accrued expenses | 174,338 | |
| Collateral on securities loaned | 1,081,773 | |
| Total liabilities | 10,549,305 | |
| Net Assets | $1,540,104,337 | |
| Net Assets consist of: | ||
| Paid in capital | $2,818,682,698 | |
| Accumulated net investment loss | (49,672) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,358,407,528) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 79,878,839 | |
| Net Assets | $1,540,104,337 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($83,588,637 ÷ 4,069,614 shares) | $20.54 | |
| Maximum offering price per share (100/94.25 of $20.54) | $21.79 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($25,169,746 ÷ 1,246,366 shares) | $20.19 | |
| Maximum offering price per share (100/96.50 of $20.19) | $20.92 | |
| Class C: | ||
| Net Asset Value and offering price per share ($101,214,813 ÷ 5,228,706 shares)(a) | $19.36 | |
| Gold: | ||
| Net Asset Value, offering price and redemption price per share ($1,271,457,815 ÷ 60,489,023 shares) | $21.02 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($58,673,326 ÷ 2,791,934 shares) | $21.02 |
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $8,352,091 | |
| Income from Fidelity Central Funds | 80,187 | |
| Income before foreign taxes withheld | 8,432,278 | |
| Less foreign taxes withheld | (800,026) | |
| Total income | 7,632,252 | |
| Expenses | ||
| Management fee | $9,811,701 | |
| Transfer agent fees | 3,642,106 | |
| Distribution and service plan fees | 1,289,371 | |
| Accounting and security lending fees | 760,040 | |
| Custodian fees and expenses | 331,897 | |
| Independent trustees' fees and expenses | 36,346 | |
| Registration fees | 211,660 | |
| Audit | 71,567 | |
| Legal | 20,581 | |
| Interest | 3,044 | |
| Miscellaneous | 19,888 | |
| Total expenses before reductions | 16,198,201 | |
| Expense reductions | (515,991) | 15,682,210 |
| Net investment income (loss) | (8,049,958) | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investments: | ||
| Unaffiliated issuers | (50,651,285) | |
| Fidelity Central Funds | 1,349 | |
| Other affiliated issuers | (1,353,943) | |
| Commodities | (4,656,219) | |
| Foreign currency transactions | 101,165 | |
| Total net realized gain (loss) | (56,558,933) | |
| Change in net unrealized appreciation (depreciation) on: Investments | 264,003,740 | |
| Assets and liabilities in foreign currencies | 16,260 | |
| Commodities | 18,412,875 | |
| Total change in net unrealized appreciation (depreciation) | 282,432,875 | |
| Net gain (loss) | 225,873,942 | |
| Net increase (decrease) in net assets resulting from operations | $217,823,984 |
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $(8,049,958) | $(2,113,041) |
| Net realized gain (loss) | (56,558,933) | (161,201,963) |
| Change in net unrealized appreciation (depreciation) | 282,432,875 | 158,387,878 |
| Net increase (decrease) in net assets resulting from operations | 217,823,984 | (4,927,126) |
| Distributions to shareholders from net realized gain | (47,051,891) | – |
| Share transactions - net increase (decrease) | 114,767,885 | 137,310,705 |
| Redemption fees | 402,160 | 180,108 |
| Total increase (decrease) in net assets | 285,942,138 | 132,563,687 |
| Net Assets | ||
| Beginning of period | 1,254,162,199 | 1,121,598,512 |
| End of period | $1,540,104,337 | $1,254,162,199 |
| Other Information | ||
| Accumulated net investment loss end of period | $(49,672) | $(13,704) |
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Financial Highlights — Gold Portfolio Class A
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $17.70 | $18.11 | $22.01 | $30.25 | $45.37 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.16) | (.06) | (.10) | –C | .07 |
| Net realized and unrealized gain (loss) | 3.59 | (.35) | (3.80) | (8.25) | (15.19) |
| Total from investment operations | 3.43 | (.41) | (3.90) | (8.25) | (15.12) |
| Distributions from net realized gain | (.60) | – | – | – | – |
| Total distributions | (.60) | – | – | – | – |
| Redemption fees added to paid in capitalB | .01 | –C | –C | .01 | –C |
| Net asset value, end of period | $20.54 | $17.70 | $18.11 | $22.01 | $30.25 |
| Total ReturnD,E | 19.97% | (2.26)% | (17.72)% | (27.24)% | (33.33)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.19% | 1.23% | 1.23% | 1.21% | 1.18% |
| Expenses net of fee waivers, if any | 1.16% | 1.20% | 1.19% | 1.19% | 1.17% |
| Expenses net of all reductions | 1.16% | 1.20% | 1.19% | 1.18% | 1.17% |
| Net investment income (loss) | (.71)% | (.44)% | (.51)% | - %H | .18% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $83,589 | $53,509 | $46,898 | $60,270 | $101,202 |
| Portfolio turnover rateI | 28% | 20% | 20% | 56% | 18% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Total returns do not include the effect of the sales charges.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than .005%.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Financial Highlights — Gold Portfolio Class T
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $17.37 | $17.83 | $21.73 | $29.95 | $45.04 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.22) | (.11) | (.15) | (.06) | (.03) |
| Net realized and unrealized gain (loss) | 3.54 | (.35) | (3.75) | (8.17) | (15.06) |
| Total from investment operations | 3.32 | (.46) | (3.90) | (8.23) | (15.09) |
| Distributions from net realized gain | (.51) | – | – | – | – |
| Total distributions | (.51) | – | – | – | – |
| Redemption fees added to paid in capitalB | .01 | –C | –C | .01 | –C |
| Net asset value, end of period | $20.19 | $17.37 | $17.83 | $21.73 | $29.95 |
| Total ReturnD,E | 19.62% | (2.58)% | (17.95)% | (27.45)% | (33.50)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.49% | 1.52% | 1.50% | 1.49% | 1.45% |
| Expenses net of fee waivers, if any | 1.46% | 1.48% | 1.46% | 1.47% | 1.44% |
| Expenses net of all reductions | 1.46% | 1.48% | 1.46% | 1.46% | 1.44% |
| Net investment income (loss) | (1.01)% | (.72)% | (.79)% | (.28)% | (.09)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $25,170 | $17,720 | $16,200 | $18,402 | $24,913 |
| Portfolio turnover rateH | 28% | 20% | 20% | 56% | 18% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Total returns do not include the effect of the sales charges.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Financial Highlights — Gold Portfolio Class C
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $16.68 | $17.20 | $21.06 | $29.15 | $44.05 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.29) | (.16) | (.23) | (.16) | (.20) |
| Net realized and unrealized gain (loss) | 3.42 | (.36) | (3.63) | (7.94) | (14.70) |
| Total from investment operations | 3.13 | (.52) | (3.86) | (8.10) | (14.90) |
| Distributions from net realized gain | (.45) | – | – | – | – |
| Total distributions | (.45) | – | – | – | – |
| Redemption fees added to paid in capitalB | –C | –C | –C | .01 | –C |
| Net asset value, end of period | $19.36 | $16.68 | $17.20 | $21.06 | $29.15 |
| Total ReturnD,E | 19.19% | (3.02)% | (18.33)% | (27.75)% | (33.83)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.88% | 1.97% | 1.96% | 1.96% | 1.93% |
| Expenses net of fee waivers, if any | 1.85% | 1.93% | 1.92% | 1.94% | 1.92% |
| Expenses net of all reductions | 1.84% | 1.93% | 1.92% | 1.93% | 1.91% |
| Net investment income (loss) | (1.40)% | (1.17)% | (1.25)% | (.76)% | (.57)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $101,215 | $52,732 | $39,429 | $33,811 | $37,787 |
| Portfolio turnover rateH | 28% | 20% | 20% | 56% | 18% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Total returns do not include the effect of the contingent deferred sales charge.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Financial Highlights — Gold Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $18.12 | $18.50 | $22.41 | $30.72 | $45.96 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.09) | (.03) | (.04) | .06 | .16 |
| Net realized and unrealized gain (loss) | 3.66 | (.35) | (3.87) | (8.38) | (15.40) |
| Total from investment operations | 3.57 | (.38) | (3.91) | (8.32) | (15.24) |
| Distributions from net realized gain | (.68) | – | – | – | – |
| Total distributions | (.68) | – | – | – | – |
| Redemption fees added to paid in capitalB | .01 | –C | –C | .01 | –C |
| Net asset value, end of period | $21.02 | $18.12 | $18.50 | $22.41 | $30.72 |
| Total ReturnD | 20.38% | (2.05)% | (17.45)% | (27.05)% | (33.16)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .87% | .97% | .94% | .94% | .93% |
| Expenses net of fee waivers, if any | .84% | .93% | .90% | .92% | .92% |
| Expenses net of all reductions | .84% | .93% | .90% | .91% | .92% |
| Net investment income (loss) | (.39)% | (.17)% | (.22)% | .27% | .43% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,271,458 | $1,076,206 | $992,944 | $1,275,913 | $2,301,019 |
| Portfolio turnover rateG | 28% | 20% | 20% | 56% | 18% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Financial Highlights — Gold Portfolio Class I
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $18.13 | $18.50 | $22.41 | $30.69 | $45.87 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.09) | (.02) | (.04) | .07 | .20 |
| Net realized and unrealized gain (loss) | 3.67 | (.35) | (3.87) | (8.36) | (15.38) |
| Total from investment operations | 3.58 | (.37) | (3.91) | (8.29) | (15.18) |
| Distributions from net realized gain | (.70) | – | – | – | – |
| Total distributions | (.70) | – | – | – | – |
| Redemption fees added to paid in capitalB | .01 | –C | –C | .01 | –C |
| Net asset value, end of period | $21.02 | $18.13 | $18.50 | $22.41 | $30.69 |
| Total ReturnD | 20.41% | (2.00)% | (17.45)% | (26.98)% | (33.09)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .87% | .92% | .90% | .87% | .84% |
| Expenses net of fee waivers, if any | .84% | .88% | .86% | .85% | .83% |
| Expenses net of all reductions | .84% | .88% | .86% | .84% | .82% |
| Net investment income (loss) | (.39)% | (.12)% | (.18)% | .34% | .52% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $58,673 | $52,607 | $23,667 | $107,830 | $128,262 |
| Portfolio turnover rateG | 28% | 20% | 20% | 56% | 18% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the consolidated financial statements.
Notes to Consolidated Financial Statements
For the period ended February 28, 2017
1. Organization.
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Gold and Class I shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class.
After the close of business on June 24, 2016, all outstanding Class B shares were converted to Class A shares. All current fiscal period dollar and share amounts for Class B presented in the Notes to Consolidated Financial Statements are for the period March 1, 2016 through June 24, 2016.
In March 2017, the Board of Trustees approved a change in the name of Class T to Class M effective after the close of business on March 24, 2017.
2. Consolidated Subsidiary.
The Fund invests in certain commodity-related investments through Fidelity Select Gold Cayman Ltd, a wholly owned subsidiary (the "Subsidiary"). As of period end, the Fund held an investment of $87,787,763 in the Subsidiary, representing 5.7% of the Fund's net assets.
The financial statements have been consolidated and include accounts of the Fund and the Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated.
3. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Consolidated Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
4. Significant Accounting Policies.
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in commodities are valued at their last traded price at 4:00 p.m. Eastern time each business day and are categorized as Level 1 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 28, 2017, including information on transfers between Levels 1 and 2, is included at the end of the Fund's Consolidated Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Fund represent a return of capital or capital gain. The Fund determines the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Consolidated Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2017, the Fund did not have any unrecognized tax benefits in the consolidated financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary's income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the consolidated financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), controlled foreign corporation, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end on an unconsolidated basis were as follows:
| Gross unrealized appreciation | $290,781,302 |
| Gross unrealized depreciation | (395,611,347) |
| Net unrealized appreciation (depreciation) on securities | $(104,830,045) |
| Tax Cost | $1,651,011,417 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $2,999,109 |
| Capital loss carryforward | $(1,218,001,068) |
| Net unrealized appreciation (depreciation) on securities and other investments | $(104,839,163) |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| No expiration | |
| Short-term | $(140,407,726) |
| Long-term | (1,077,593,342) |
| Total capital loss carryforward | $(1,218,001,068) |
The tax character of distributions paid was as follows:
| February 28, 2017 | February 29, 2016 | |
| Ordinary Income | $47,051,891 | $– |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital. In November 2016, the Board of Trustees approved the elimination of these redemption fees effective December 12, 2016.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Consolidated Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $531,160,049 and $456,022,645, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease.
FMR, either through itself or through an affiliate provides investment management related services to the Subsidiary for which the Subsidiary pays a monthly management fee at the annual rate of .30% of its net assets. Under the management contract with the subsidiary, FMR pays all other expenses of the Subsidiary, except custodian fees.
For the reporting period, the total consolidated annual management fee rate which includes the management fee of the Fund and the Subsidiary was .57% of the Fund's average net assets.
During the period, the investment adviser waived a portion of the Fund's management fee representing the amount of the management fee paid by the Subsidiary to FMR as described in the Expense Reductions note.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution Fee | Service Fee | Total Fees | Retained by FDC | |
| Class A | -% | .25% | $218,687 | $1,445 |
| Class T | .25% | .25% | 130,979 | 132 |
| Class B | .75% | .25% | 4,112 | 3,086 |
| Class C | .75% | .25% | 935,593 | 341,534 |
| $1,289,371 | $346,197 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $99,491 |
| Class T | 15,214 |
| Class B(a) | 45 |
| Class C(a) | 22,697 |
| $137,447 |
(a) When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc., (FIIOC), an affiliate of the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $247,853 | .28 |
| Class T | 86,396 | .33 |
| Class B | 1,090 | .27 |
| Class C | 202,946 | .22 |
| Gold | 2,964,629 | .21 |
| Class I | 139,192 | .21 |
| $3,642,106 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Consolidated Statement of Operations. The commissions paid to these affiliated firms were $8,571 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense |
| Borrower | $6,242,148 | .65% | $3,044 |
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Other. During the period, the investment adviser reimbursed the Fund for certain losses in the amount of $4,125.
7. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,499 and is reflected in Miscellaneous expenses on the Consolidated Statement of Operations. During the period, the Fund did not borrow on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Consolidated Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Consolidated Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $10,665.
9. Expense Reductions.
The investment adviser has contractually agreed to waive the Fund's management fee in an amount equal to the management fee paid by the Subsidiary to FMR. During the period, this waiver reduced the Fund's management fee by $471,109.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $35,346 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $9,536.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| From net realized gain | ||
| Class A | $2,221,326 | $– |
| Class T | 587,030 | – |
| Class C | 2,039,868 | – |
| Gold | 40,224,766 | – |
| Class I | 1,978,901 | – |
| Total | $47,051,891 | $– |
11. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
| Shares | Shares | Dollars | Dollars | |
| Year ended February 28, 2017 | Year ended February 29, 2016 | Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Class A | ||||
| Shares sold | 3,164,607 | 1,535,243 | $69,537,871 | $23,173,408 |
| Reinvestment of distributions | 120,564 | – | 2,146,978 | – |
| Shares redeemed | (2,238,855) | (1,100,912) | (48,377,613) | (16,009,093) |
| Net increase (decrease) | 1,046,316 | 434,331 | $23,307,236 | $7,164,315 |
| Class T | ||||
| Shares sold | 712,177 | 373,972 | $15,561,760 | $5,610,984 |
| Reinvestment of distributions | 32,071 | – | 560,038 | – |
| Shares redeemed | (517,783) | (262,516) | (11,004,318) | (3,867,307) |
| Net increase (decrease) | 226,465 | 111,456 | $5,117,480 | $1,743,677 |
| Class B | ||||
| Shares sold | 7,043 | 6,237 | $134,526 | $87,905 |
| Shares redeemed | (89,907) | (65,868) | (1,923,575) | (948,946) |
| Net increase (decrease) | (82,864) | (59,631) | $(1,789,049) | $(861,041) |
| Class C | ||||
| Shares sold | 3,277,150 | 1,382,064 | $68,100,712 | $19,834,455 |
| Reinvestment of distributions | 115,019 | – | 1,909,405 | – |
| Shares redeemed | (1,324,351) | (513,567) | (26,570,952) | (7,072,215) |
| Net increase (decrease) | 2,067,818 | 868,497 | $43,439,165 | $12,762,240 |
| Gold | ||||
| Shares sold | 44,152,495 | 25,445,576 | $998,832,934 | $393,817,498 |
| Reinvestment of distributions | 2,098,203 | – | 38,476,693 | – |
| Shares redeemed | (45,146,079) | (19,739,546) | (990,273,602) | (303,052,757) |
| Net increase (decrease) | 1,104,619 | 5,706,030 | $47,036,025 | $90,764,741 |
| Class I | ||||
| Shares sold | 2,033,849 | 2,727,491 | $45,606,027 | $42,106,104 |
| Reinvestment of distributions | 97,474 | – | 1,788,422 | – |
| Shares redeemed | (2,240,667) | (1,105,474) | (49,737,421) | (16,369,331) |
| Net increase (decrease) | (109,344) | 1,622,017 | $(2,342,972) | $25,736,773 |
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Fidelity Advisor® Materials Fund
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Class A (incl. 5.75% sales charge) | 22.69% | 5.74% | 6.91% |
| Class T (incl. 3.50% sales charge) | 25.24% | 5.92% | 6.85% |
| Class C (incl. contingent deferred sales charge) | 28.21% | 6.20% | 6.73% |
| Class I | 30.55% | 7.30% | 7.85% |
Class C shares' contingent deferred sales charges included in the past one year, past five years and past ten years total return figures are 1%, 0% and 0%, respectively.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor® Materials Fund - Class A on February 28, 2007, and the current 5.75% sales charge was paid.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $19,502 | Fidelity Advisor® Materials Fund - Class A | |
| $20,834 | S&P 500® Index | |
Fidelity Advisor® Materials Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Tobias Welo: For the year, the fund’s share classes (excluding sales charges, if applicable) returned roughly 29% to 31%, trailing the 34.26% gain of the MSCI U.S. IMI Materials 25/50 Index, but topping the S&P 500®. Despite a robust rally in materials stocks fueled by post-election optimism, my focus on stocks with positive cyclical drivers was less effective this period. Versus the MSCI sector index, negligible exposure to the strong-performing steel group hampered fund results, as did stock picking in fertilizers & agricultural chemicals and untimely ownership of gold equities. A large overweighting in paper-packaging provider Graphic Packaging Holding was the fund’s largest relative detractor. The stock considerably underperformed our industry index this period, partly due to weakness in paperboard prices. Other detractors included sizable overweightings in specialty chemicals provider W.R. Grace and fertilizer maker CF Industries Holdings. Conversely, picks in construction materials and commodity chemicals were noteworthy positives, along with a sizable underweighting in the lagging industrial-gases group and a meaningful overweighting in the strong-performing paper-packaging segment. In the latter category, our top contributor was WestRock, the fund's second-largest holding at period end. Our large overweighting in this stock reflected my belief in the longer-term promise of the union of MeadWestvaco and Rock-Tenn in July 2015, from which WestRock was formed. Another standout and significant overweighting for the fund was construction materials supplier Eagle Materials.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Materials Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| E.I. du Pont de Nemours & Co. | 15.3 | 15.5 |
| WestRock Co. | 6.4 | 7.7 |
| Monsanto Co. | 6.1 | 7.5 |
| LyondellBasell Industries NV Class A | 5.5 | 4.2 |
| Graphic Packaging Holding Co. | 4.8 | 6.1 |
| Ball Corp. | 4.6 | 5.7 |
| The Dow Chemical Co. | 4.6 | 4.9 |
| PPG Industries, Inc. | 4.4 | 4.9 |
| Ecolab, Inc. | 3.9 | 4.6 |
| Air Products & Chemicals, Inc. | 3.7 | 0.0 |
| 59.3 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Chemicals | 67.7% | |
| Containers & Packaging | 16.6% | |
| Metals & Mining | 9.4% | |
| Construction Materials | 3.3% | |
| Trading Companies & Distributors | 2.0% | |
| All Others* | 1.0% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Chemicals | 67.5% | |
| Containers & Packaging | 21.3% | |
| Metals & Mining | 5.6% | |
| Construction Materials | 4.0% | |
| Trading Companies & Distributors | 1.2% | |
| All Others* | 0.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Materials Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 99.0% | |||
| Shares | Value | ||
| Chemicals - 67.7% | |||
| Commodity Chemicals - 8.4% | |||
| LyondellBasell Industries NV Class A | 941,596 | $85,911,219 | |
| Olin Corp. | 674,300 | 20,957,244 | |
| Trinseo SA | 245,900 | 17,003,985 | |
| Westlake Chemical Corp. | 131,300 | 8,328,359 | |
| 132,200,807 | |||
| Diversified Chemicals - 27.0% | |||
| Ashland Global Holdings, Inc. | 147,200 | 17,761,152 | |
| E.I. du Pont de Nemours & Co. | 3,049,100 | 239,476,313 | |
| Eastman Chemical Co. | 614,448 | 49,309,452 | |
| The Chemours Co. LLC | 1,295,200 | 43,596,432 | |
| The Dow Chemical Co. | 1,167,800 | 72,707,228 | |
| 422,850,577 | |||
| Fertilizers & Agricultural Chemicals - 10.8% | |||
| Agrium, Inc. | 250,900 | 24,188,936 | |
| CF Industries Holdings, Inc. | 744,910 | 23,405,072 | |
| Monsanto Co. | 842,930 | 95,950,722 | |
| The Scotts Miracle-Gro Co. Class A | 286,431 | 25,959,242 | |
| 169,503,972 | |||
| Industrial Gases - 3.7% | |||
| Air Products & Chemicals, Inc. | 409,900 | 57,578,653 | |
| Specialty Chemicals - 17.8% | |||
| Axalta Coating Systems (a) | 518,700 | 15,099,357 | |
| Ecolab, Inc. | 490,820 | 60,846,955 | |
| Frutarom Industries Ltd. | 215,996 | 12,256,186 | |
| Platform Specialty Products Corp. (a) | 1,626,800 | 21,457,492 | |
| PPG Industries, Inc. | 674,700 | 69,109,521 | |
| Sherwin-Williams Co. | 148,700 | 45,879,898 | |
| W.R. Grace & Co. | 771,640 | 54,662,978 | |
| 279,312,387 | |||
| TOTAL CHEMICALS | 1,061,446,396 | ||
| Construction Materials - 3.3% | |||
| Construction Materials - 3.3% | |||
| Eagle Materials, Inc. | 504,215 | 52,292,138 | |
| Containers & Packaging - 16.6% | |||
| Metal & Glass Containers - 5.4% | |||
| Ball Corp. | 992,875 | 73,006,099 | |
| Berry Plastics Group, Inc. (a) | 242,000 | 12,179,860 | |
| 85,185,959 | |||
| Paper Packaging - 11.2% | |||
| Graphic Packaging Holding Co. | 5,680,295 | 75,831,938 | |
| WestRock Co. | 1,857,219 | 99,769,805 | |
| 175,601,743 | |||
| TOTAL CONTAINERS & PACKAGING | 260,787,702 | ||
| Metals & Mining - 9.4% | |||
| Copper - 2.9% | |||
| Freeport-McMoRan, Inc. (a) | 3,334,100 | 44,676,940 | |
| Diversified Metals & Mining - 3.6% | |||
| Alcoa Corp. | 464,800 | 16,077,432 | |
| Glencore Xstrata PLC (a) | 3,587,482 | 14,336,143 | |
| Rio Tinto PLC | 645,400 | 26,452,487 | |
| 56,866,062 | |||
| Gold - 2.9% | |||
| Barrick Gold Corp. | 820,700 | 15,144,825 | |
| Franco-Nevada Corp. | 208,300 | 13,426,113 | |
| Randgold Resources Ltd. sponsored ADR (b) | 180,800 | 16,581,168 | |
| 45,152,106 | |||
| TOTAL METALS & MINING | 146,695,108 | ||
| Trading Companies & Distributors - 2.0% | |||
| Trading Companies & Distributors - 2.0% | |||
| Nexeo Solutions, Inc. (c) | 1,116,600 | 10,339,716 | |
| Univar, Inc. (a) | 629,600 | 20,273,120 | |
| 30,612,836 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $1,215,382,264) | 1,551,834,180 | ||
| Money Market Funds - 2.4% | |||
| Fidelity Cash Central Fund, 0.60% (d) | 26,183,408 | 26,188,645 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (d)(e) | 12,517,902 | 12,520,406 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $38,706,553) | 38,709,051 | ||
| TOTAL INVESTMENT PORTFOLIO - 101.4% | |||
| (Cost $1,254,088,817) | 1,590,543,231 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.4)% | (22,668,422) | ||
| NET ASSETS - 100% | $1,567,874,809 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $10,339,716 or 0.7% of net assets.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(e) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| Nexeo Solutions, Inc. | 6/9/16 | $11,166,000 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $64,287 |
| Fidelity Securities Lending Cash Central Fund | 89,092 |
| Total | $153,379 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $1,551,834,180 | $1,525,381,693 | $26,452,487 | $-- |
| Money Market Funds | 38,709,051 | 38,709,051 | -- | -- |
| Total Investments in Securities: | $1,590,543,231 | $1,564,090,744 | $26,452,487 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 85.6% |
| Netherlands | 5.5% |
| Canada | 3.3% |
| Bailiwick of Jersey | 2.0% |
| United Kingdom | 1.7% |
| Luxembourg | 1.1% |
| Others (Individually Less Than 1%) | 0.8% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Materials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $12,408,363) — See accompanying schedule: Unaffiliated issuers (cost $1,215,382,264) | $1,551,834,180 | |
| Fidelity Central Funds (cost $38,706,553) | 38,709,051 | |
| Total Investments (cost $1,254,088,817) | $1,590,543,231 | |
| Foreign currency held at value (cost $19,790) | 19,388 | |
| Receivable for fund shares sold | 2,720,643 | |
| Dividends receivable | 3,046,320 | |
| Distributions receivable from Fidelity Central Funds | 19,080 | |
| Prepaid expenses | 5,272 | |
| Other receivables | 99,232 | |
| Total assets | 1,596,453,166 | |
| Liabilities | ||
| Payable for investments purchased | $10,612,092 | |
| Payable for fund shares redeemed | 4,192,323 | |
| Accrued management fee | 704,469 | |
| Distribution and service plan fees payable | 129,497 | |
| Other affiliated payables | 297,515 | |
| Other payables and accrued expenses | 127,211 | |
| Collateral on securities loaned | 12,515,250 | |
| Total liabilities | 28,578,357 | |
| Net Assets | $1,567,874,809 | |
| Net Assets consist of: | ||
| Paid in capital | $1,219,514,455 | |
| Undistributed net investment income | 2,492,054 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 9,423,575 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 336,444,725 | |
| Net Assets | $1,567,874,809 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($229,085,975 ÷ 2,818,905 shares) | $81.27 | |
| Maximum offering price per share (100/94.25 of $81.27) | $86.23 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($40,935,304 ÷ 507,531 shares) | $80.66 | |
| Maximum offering price per share (100/96.50 of $80.66) | $83.59 | |
| Class C: | ||
| Net Asset Value and offering price per share ($80,225,272 ÷ 1,019,159 shares)(a) | $78.72 | |
| Materials: | ||
| Net Asset Value, offering price and redemption price per share ($882,504,037 ÷ 10,809,628 shares) | $81.64 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($335,124,221 ÷ 4,112,229 shares) | $81.49 |
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $29,133,077 | |
| Income from Fidelity Central Funds | 153,379 | |
| Total income | 29,286,456 | |
| Expenses | ||
| Management fee | $7,904,862 | |
| Transfer agent fees | 3,070,538 | |
| Distribution and service plan fees | 1,420,989 | |
| Accounting and security lending fees | 456,285 | |
| Custodian fees and expenses | 45,540 | |
| Independent trustees' fees and expenses | 31,309 | |
| Registration fees | 118,755 | |
| Audit | 50,408 | |
| Legal | 21,488 | |
| Interest | 1,640 | |
| Miscellaneous | 20,582 | |
| Total expenses before reductions | 13,142,396 | |
| Expense reductions | (93,787) | 13,048,609 |
| Net investment income (loss) | 16,237,847 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 46,427,248 | |
| Redemptions in-kind with affiliated entities | 17,720,821 | |
| Fidelity Central Funds | 4,670 | |
| Foreign currency transactions | (57,126) | |
| Total net realized gain (loss) | 64,095,613 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 293,430,621 | |
| Assets and liabilities in foreign currencies | (9,689) | |
| Total change in net unrealized appreciation (depreciation) | 293,420,932 | |
| Net gain (loss) | 357,516,545 | |
| Net increase (decrease) in net assets resulting from operations | $373,754,392 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $16,237,847 | $21,289,378 |
| Net realized gain (loss) | 64,095,613 | 179,640 |
| Change in net unrealized appreciation (depreciation) | 293,420,932 | (394,277,283) |
| Net increase (decrease) in net assets resulting from operations | 373,754,392 | (372,808,265) |
| Distributions to shareholders from net investment income | (13,547,763) | (15,036,509) |
| Distributions to shareholders from net realized gain | – | (20,008,646) |
| Total distributions | (13,547,763) | (35,045,155) |
| Share transactions - net increase (decrease) | (113,259,980) | (326,507,843) |
| Redemption fees | 17,097 | 36,485 |
| Total increase (decrease) in net assets | 246,963,746 | (734,324,778) |
| Net Assets | ||
| Beginning of period | 1,320,911,063 | 2,055,235,841 |
| End of period | $1,567,874,809 | $1,320,911,063 |
| Other Information | ||
| Undistributed net investment income end of period | $2,492,054 | $– |
| Distributions in excess of net investment income end of period | $– | $(45,053) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Materials Portfolio Class A
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $62.94 | $80.43 | $86.46 | $73.44 | $69.23 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .70 | .79 | .51 | .36 | .70 |
| Net realized and unrealized gain (loss) | 18.26 | (16.80) | 1.05 | 14.56 | 5.69 |
| Total from investment operations | 18.96 | (16.01) | 1.56 | 14.92 | 6.39 |
| Distributions from net investment income | (.63) | (.58) | (.43) | (.30) | (.63) |
| Distributions from net realized gain | – | (.91) | (7.17) | (1.60) | (1.55) |
| Total distributions | (.63) | (1.48)C | (7.59)D | (1.90) | (2.18) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $81.27 | $62.94 | $80.43 | $86.46 | $73.44 |
| Total ReturnF,G | 30.18% | (20.01)% | 2.20% | 20.46% | 9.40% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.08% | 1.06% | 1.06% | 1.10% | 1.13% |
| Expenses net of fee waivers, if any | 1.08% | 1.06% | 1.06% | 1.10% | 1.13% |
| Expenses net of all reductions | 1.07% | 1.06% | 1.06% | 1.09% | 1.12% |
| Net investment income (loss) | .96% | 1.09% | .61% | .45% | 1.02% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $229,086 | $202,747 | $319,740 | $336,777 | $219,627 |
| Portfolio turnover rateJ | 49%K | 64% | 76%K | 53% | 61% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $1.48 per share is comprised of distributions from net investment income of $.575 and distributions from net realized gain of $.906 per share.
D Total distributions of $7.59 per share is comprised of distributions from net investment income of $.425 and distributions from net realized gain of $7.167 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Total returns do not include the effect of the sales charges.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Materials Portfolio Class T
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $62.52 | $79.95 | $85.99 | $73.05 | $68.91 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .47 | .56 | .25 | .12 | .50 |
| Net realized and unrealized gain (loss) | 18.12 | (16.69) | 1.06 | 14.48 | 5.66 |
| Total from investment operations | 18.59 | (16.13) | 1.31 | 14.60 | 6.16 |
| Distributions from net investment income | (.45) | (.40) | (.18) | (.06) | (.46) |
| Distributions from net realized gain | – | (.91) | (7.17) | (1.60) | (1.55) |
| Total distributions | (.45) | (1.30)C | (7.35) | (1.66) | (2.02)D |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $80.66 | $62.52 | $79.95 | $85.99 | $73.05 |
| Total ReturnF,G | 29.78% | (20.27)% | 1.90% | 20.10% | 9.10% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.39% | 1.38% | 1.37% | 1.40% | 1.42% |
| Expenses net of fee waivers, if any | 1.39% | 1.37% | 1.37% | 1.40% | 1.42% |
| Expenses net of all reductions | 1.38% | 1.37% | 1.37% | 1.39% | 1.41% |
| Net investment income (loss) | .65% | .77% | .31% | .15% | .73% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $40,935 | $30,118 | $45,252 | $45,223 | $37,860 |
| Portfolio turnover rateJ | 49%K | 64% | 76%K | 53% | 61% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $1.30 per share is comprised of distributions from net investment income of $.395 and distributions from net realized gain of $.906 per share.
D Total distributions of $2.02 per share is comprised of distributions from net investment income of $.463 and distributions from net realized gain of $1.552 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Total returns do not include the effect of the sales charges.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Materials Portfolio Class C
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $61.09 | $78.12 | $84.38 | $71.96 | $67.98 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .15 | .24 | (.12) | (.23) | .18 |
| Net realized and unrealized gain (loss) | 17.68 | (16.28) | 1.03 | 14.23 | 5.55 |
| Total from investment operations | 17.83 | (16.04) | .91 | 14.00 | 5.73 |
| Distributions from net investment income | (.20) | (.08) | – | – | (.20) |
| Distributions from net realized gain | – | (.91) | (7.17) | (1.58) | (1.55) |
| Total distributions | (.20) | (.99) | (7.17) | (1.58) | (1.75) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $78.72 | $61.09 | $78.12 | $84.38 | $71.96 |
| Total ReturnD,E | 29.21% | (20.61)% | 1.43% | 19.56% | 8.58% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.83% | 1.81% | 1.82% | 1.85% | 1.89% |
| Expenses net of fee waivers, if any | 1.82% | 1.81% | 1.82% | 1.85% | 1.89% |
| Expenses net of all reductions | 1.82% | 1.81% | 1.82% | 1.84% | 1.88% |
| Net investment income (loss) | .21% | .34% | (.14)% | (.30)% | .26% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $80,225 | $66,896 | $107,697 | $106,879 | $75,007 |
| Portfolio turnover rateH | 49%I | 64% | 76%I | 53% | 61% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Total returns do not include the effect of the contingent deferred sales charge.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Materials Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.20 | $80.77 | $86.81 | $73.68 | $69.41 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .90 | .98 | .73 | .58 | .90 |
| Net realized and unrealized gain (loss) | 18.34 | (16.89) | 1.05 | 14.63 | 5.71 |
| Total from investment operations | 19.24 | (15.91) | 1.78 | 15.21 | 6.61 |
| Distributions from net investment income | (.80) | (.76) | (.65) | (.48) | (.79) |
| Distributions from net realized gain | – | (.91) | (7.17) | (1.60) | (1.55) |
| Total distributions | (.80) | (1.66)C | (7.82) | (2.08) | (2.34) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $81.64 | $63.20 | $80.77 | $86.81 | $73.68 |
| Total ReturnE | 30.52% | (19.81)% | 2.46% | 20.80% | 9.71% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .81% | .81% | .80% | .82% | .85% |
| Expenses net of fee waivers, if any | .81% | .81% | .80% | .82% | .85% |
| Expenses net of all reductions | .81% | .80% | .80% | .82% | .84% |
| Net investment income (loss) | 1.22% | 1.34% | .87% | .73% | 1.30% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $882,504 | $711,985 | $1,107,689 | $1,231,942 | $1,146,782 |
| Portfolio turnover rateH | 49%I | 64% | 76%I | 53% | 61% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $1.66 per share is comprised of distributions from net investment income of $.756 and distributions from net realized gain of $.906 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Materials Portfolio Class I
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.07 | $80.60 | $86.66 | $73.57 | $69.35 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .91 | 1.00 | .74 | .59 | .90 |
| Net realized and unrealized gain (loss) | 18.31 | (16.86) | 1.05 | 14.60 | 5.70 |
| Total from investment operations | 19.22 | (15.86) | 1.79 | 15.19 | 6.60 |
| Distributions from net investment income | (.80) | (.77) | (.68) | (.50) | (.83) |
| Distributions from net realized gain | – | (.91) | (7.17) | (1.60) | (1.55) |
| Total distributions | (.80) | (1.67)C | (7.85) | (2.10) | (2.38) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $81.49 | $63.07 | $80.60 | $86.66 | $73.57 |
| Total ReturnE | 30.55% | (19.79)% | 2.49% | 20.81% | 9.71% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .79% | .78% | .78% | .81% | .85% |
| Expenses net of fee waivers, if any | .79% | .78% | .78% | .81% | .85% |
| Expenses net of all reductions | .78% | .78% | .78% | .81% | .84% |
| Net investment income (loss) | 1.25% | 1.37% | .89% | .74% | 1.30% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $335,124 | $306,145 | $468,371 | $333,963 | $246,696 |
| Portfolio turnover rateH | 49%I | 64% | 76%I | 53% | 61% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $1.67 per share is comprised of distributions from net investment income of $.767 and distributions from net realized gain of $.906 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2017
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Materials and Class I shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class.
After the close of business on June 24, 2016, all outstanding Class B shares were converted to Class A shares. All current fiscal period dollar and share amounts for Class B presented in the Notes to Financial Statements are for the period March 1, 2016 through June 24, 2016.
In March 2017, the Board of Trustees approved a change in the name of Class T to Class M effective after the close of business on March 24, 2017.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 28, 2017 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Fund represent a return of capital or capital gain. The Fund determines the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2017, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to in-kind transactions, foreign currency transactions, deferred trustees compensations, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $355,770,575 |
| Gross unrealized depreciation | (24,555,933) |
| Net unrealized appreciation (depreciation) on securities | $331,214,642 |
| Tax Cost | $1,259,328,589 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $2,568,977 |
| Undistributed long-term capital gain | $15,355,441 |
| Net unrealized appreciation (depreciation) on securities and other investments | $331,204,953 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| Fiscal year of expiration | |
| 2018 | $(611,309) |
| 2019 | (80,787) |
| Total with expiration | $(692,096) |
The Fund acquired $692,096 of its capital loss carryforward as part of a merger in a prior period. The losses acquired that will be available to offset future capital gains of the Fund will be limited to approximately $611,309 per year.
The tax character of distributions paid was as follows:
| February 28, 2017 | February 29, 2016 | |
| Ordinary Income | $13,547,763 | $ 15,036,509 |
| Long-term Capital Gains | – | 20,008,646 |
| Total | $13,547,763 | $ 35,045,155 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital. In November 2016, the Board of Trustees approved the elimination of these redemption fees effective December 12, 2016.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, aggregated $693,566,413 and $738,416,796, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution Fee | Service Fee | Total Fees | Retained by FDC | |
| Class A | -% | .25% | $523,269 | $– |
| Class T | .25% | .25% | 170,918 | – |
| Class B | .75% | .25% | 9,283 | 6,962 |
| Class C | .75% | .25% | 717,519 | 48,804 |
| $1,420,989 | $55,766 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $62,168 |
| Class T | 6,901 |
| Class B(a) | 132 |
| Class C(a) | 4,512 |
| $73,713 |
(a) When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc., (FIIOC), an affiliate of the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $473,160 | .23 |
| Class T | 97,978 | .29 |
| Class B | 2,396 | .26 |
| Class C | 161,032 | .22 |
| Materials | 1,705,128 | .21 |
| Class I | 630,844 | .19 |
| $3,070,538 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $22,121 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense |
| Borrower | $6,565,000 | .60% | $1,640 |
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Redemptions In-Kind. During the period, 845,013 shares of the Fund held by an affiliated entity were redeemed in-kind for investments and cash with a value of $60,325,459. The net realized gain of $17,720,821 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 10: Share Transactions. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,299 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $89,092.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $81,087 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $12,700.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| From net investment income | ||
| Class A | $1,672,756 | $1,939,569 |
| Class T | 205,222 | 197,484 |
| Class C | 195,843 | 96,966 |
| Materials | 8,304,133 | 8,906,972 |
| Class I | 3,169,809 | 3,895,518 |
| Total | $13,547,763 | $15,036,509 |
| From net realized gain | ||
| Class A | $– | $3,076,815 |
| Class T | – | 454,774 |
| Class B | – | 50,258 |
| Class C | – | 1,065,857 |
| Materials | – | 10,731,466 |
| Class I | – | 4,629,476 |
| Total | $– | $20,008,646 |
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
| Shares | Shares | Dollars | Dollars | |
| Year ended February 28, 2017 | Year ended February 29, 2016 | Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Class A | ||||
| Shares sold | 902,923 | 820,014 | $67,495,419 | $59,881,537 |
| Reinvestment of distributions | 20,549 | 70,909 | 1,575,920 | 4,729,990 |
| Shares redeemed | (1,326,009) | (1,644,717) | (96,308,599) | (118,125,615) |
| Net increase (decrease) | (402,537) | (753,794) | $(27,237,260) | $(53,514,088) |
| Class T | ||||
| Shares sold | 158,674 | 84,811 | $11,939,333 | $5,963,121 |
| Reinvestment of distributions | 2,663 | 9,611 | 202,830 | 637,500 |
| Shares redeemed | (135,543) | (178,706) | (9,849,995) | (12,734,979) |
| Net increase (decrease) | 25,794 | (84,284) | $2,292,168 | $(6,134,358) |
| Class B | ||||
| Shares sold | 325 | 1,827 | $22,444 | $136,913 |
| Reinvestment of distributions | – | 717 | – | 46,833 |
| Shares redeemed | (49,631) | (36,076) | (3,403,614) | (2,579,948) |
| Net increase (decrease) | (49,306) | (33,532) | $(3,381,170) | $(2,396,202) |
| Class C | ||||
| Shares sold | 197,093 | 141,291 | $14,487,205 | $10,125,628 |
| Reinvestment of distributions | 2,419 | 16,060 | 179,992 | 1,043,658 |
| Shares redeemed | (275,454) | (440,847) | (19,415,602) | (30,549,327) |
| Net increase (decrease) | (75,942) | (283,496) | $(4,748,405) | $(19,380,041) |
| Materials | ||||
| Shares sold | 2,367,980 | 1,388,149 | $176,958,165 | $101,563,248 |
| Reinvestment of distributions | 100,563 | 273,187 | 7,743,369 | 18,281,510 |
| Shares redeemed | (2,924,430) | (4,109,408) | (214,559,584) | (297,748,381) |
| Net increase (decrease) | (455,887) | (2,448,072) | $(29,858,050) | $(177,903,623) |
| Class I | ||||
| Shares sold | 1,754,029 | 1,480,820 | $130,244,335 | $107,996,943 |
| Reinvestment of distributions | 37,780 | 118,643 | 2,903,738 | 7,923,047 |
| Shares redeemed | (2,533,375)(a) | (2,556,391) | (183,475,336)(a) | (183,099,521) |
| Net increase (decrease) | (741,566) | (956,928) | $(50,327,263) | $(67,179,531) |
(a) Amount includes in-kind redemptions (see Note 5: Redemptions In-Kind).
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Fidelity Advisor® Telecommunications Fund
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Class A (incl. 5.75% sales charge) | 11.82% | 10.55% | 4.79% |
| Class T (incl. 3.50% sales charge) | 14.12% | 10.73% | 4.72% |
| Class C (incl. contingent deferred sales charge) | 16.77% | 11.07% | 4.64% |
| Class I | 19.03% | 12.22% | 5.74% |
Class C shares' contingent deferred sales charges included in the past one year, past five years and past ten years total return figures are 1%, 0% and 0%, respectively.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity Advisor® Telecommunications Fund - Class A on February 28, 2007, and the current 5.75% sales charge was paid.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $15,962 | Fidelity Advisor® Telecommunications Fund - Class A | |
| $20,834 | S&P 500® Index | |
Fidelity Advisor® Telecommunications Fund
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Matthew Drukker: For the year, the fund’s share classes (excluding sales charges, if applicable), outpaced the 13.77% result of the MSCI U.S. IMI Telecommunication Services 25/50 Index by roughly 4 to 5 percentage points. Nonetheless, the fund fell short of the broad-based S&P 500, as telecom stocks cooled off mid-period. Stock selection among specialized real estate investment trusts (REITs), cable & satellite, and wireless telecommunication services all helped performance versus the index. The fund’s biggest relative contribution came from largely avoiding wireless provider NII Holdings, which recently had emerged from bankruptcy. The fund’s sizable position in American Tower, a large owner/operator of wireless communication towers, also was beneficial. American Tower exhibited sustainable growth as wireless providers have continued to invest in broadband access to remain competitive. On the downside, choices among integrated telecommunication services names hindered the fund’s relative results. An underweighting in pre-paid calling card provider and strong-performing index component IDT was the fund's most significant detractor. We sold the position in IDT by period end.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Telecommunications Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Verizon Communications, Inc. | 19.3 | 14.5 |
| AT&T, Inc. | 15.2 | 22.5 |
| T-Mobile U.S., Inc. | 8.1 | 5.8 |
| SBA Communications Corp. Class A | 5.4 | 5.4 |
| Level 3 Communications, Inc. | 4.6 | 4.5 |
| CenturyLink, Inc. | 3.5 | 2.8 |
| American Tower Corp. | 2.9 | 2.6 |
| Cogent Communications Group, Inc. | 2.5 | 2.4 |
| Lumos Networks Corp. | 2.5 | 2.4 |
| Iridium Communications, Inc. | 2.4 | 1.3 |
| 66.4 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Diversified Telecommunication Services | 68.1% | |
| Wireless Telecommunication Services | 15.5% | |
| Media | 8.7% | |
| Equity Real Estate Investment Trusts (Reits) | 3.8% | |
| Semiconductors & Semiconductor Equipment | 1.2% | |
| All Others* | 2.7% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Diversified Telecommunication Services | 71.7% | |
| Wireless Telecommunication Services | 16.0% | |
| Media | 8.3% | |
| Real Estate Investment Trusts | 2.6% | |
| Internet Software & Services | 0.8% | |
| All Others* | 0.6% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Telecommunications Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 99.8% | |||
| Shares | Value | ||
| Commercial Services & Supplies - 0.4% | |||
| Office Services & Supplies - 0.4% | |||
| West Corp. | 136,100 | $3,254,151 | |
| Diversified Telecommunication Services - 68.1% | |||
| Alternative Carriers - 16.3% | |||
| Cogent Communications Group, Inc. | 465,268 | 19,285,359 | |
| Globalstar, Inc. (a)(b) | 3,620,022 | 4,959,430 | |
| Iliad SA | 26,408 | 5,468,033 | |
| Iridium Communications, Inc. (a)(b) | 2,107,430 | 18,334,641 | |
| Level 3 Communications, Inc. (a) | 614,367 | 35,172,511 | |
| Lumos Networks Corp. (a) | 1,071,878 | 18,982,959 | |
| Vonage Holdings Corp. (a) | 1,978,071 | 11,907,987 | |
| Zayo Group Holdings, Inc. (a) | 303,900 | 9,578,928 | |
| 123,689,848 | |||
| Integrated Telecommunication Services - 51.8% | |||
| AT&T, Inc. | 2,751,620 | 114,990,200 | |
| Atlantic Tele-Network, Inc. | 183,300 | 12,535,887 | |
| CenturyLink, Inc. (b) | 1,098,978 | 26,661,206 | |
| Cincinnati Bell, Inc. (a) | 414,502 | 7,999,889 | |
| Consolidated Communications Holdings, Inc. (b) | 167,898 | 3,786,100 | |
| FairPoint Communications, Inc. (a) | 313,500 | 4,968,975 | |
| Frontier Communications Corp. (b) | 5,088,034 | 14,907,940 | |
| General Communications, Inc. Class A (a) | 501,693 | 10,109,114 | |
| SBA Communications Corp. Class A (a) | 355,556 | 41,162,718 | |
| Verizon Communications, Inc. | 2,950,397 | 146,428,204 | |
| Windstream Holdings, Inc. (b) | 1,139,309 | 8,510,638 | |
| 392,060,871 | |||
| TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 515,750,719 | ||
| Equity Real Estate Investment Trusts (REITs) - 3.8% | |||
| Specialized REITs - 3.8% | |||
| American Tower Corp. | 192,990 | 22,153,322 | |
| Communications Sales & Leasing, Inc. | 228,000 | 6,605,160 | |
| 28,758,482 | |||
| Internet & Direct Marketing Retail - 0.5% | |||
| Internet & Direct Marketing Retail - 0.5% | |||
| Liberty Interactive Corp. QVC Group Series A (a) | 200,800 | 3,791,104 | |
| Internet Software & Services - 1.0% | |||
| Internet Software & Services - 1.0% | |||
| Gogo, Inc. (a)(b) | 734,247 | 7,783,018 | |
| Media - 8.7% | |||
| Broadcasting - 0.5% | |||
| Nexstar Broadcasting Group, Inc. Class A | 57,900 | 3,992,205 | |
| Cable & Satellite - 6.5% | |||
| Altice NV Class A (a) | 483,479 | 10,195,294 | |
| Charter Communications, Inc. Class A (a) | 43,375 | 14,012,728 | |
| Comcast Corp. Class A | 183,800 | 6,877,796 | |
| Liberty Global PLC: | |||
| Class C (a) | 400,336 | 14,047,790 | |
| LiLAC Class C (a) | 91,034 | 2,238,526 | |
| Megacable Holdings S.A.B. de CV unit | 568,000 | 2,044,534 | |
| 49,416,668 | |||
| Movies & Entertainment - 1.7% | |||
| The Walt Disney Co. | 57,000 | 6,275,130 | |
| Time Warner, Inc. | 64,900 | 6,373,829 | |
| 12,648,959 | |||
| TOTAL MEDIA | 66,057,832 | ||
| Semiconductors & Semiconductor Equipment - 1.2% | |||
| Semiconductors - 1.2% | |||
| Broadcom Ltd. | 21,500 | 4,534,995 | |
| Qorvo, Inc. (a) | 65,500 | 4,329,550 | |
| 8,864,545 | |||
| Technology Hardware, Storage & Peripherals - 0.6% | |||
| Technology Hardware, Storage & Peripherals - 0.6% | |||
| Apple, Inc. | 32,600 | 4,465,874 | |
| Wireless Telecommunication Services - 15.5% | |||
| Wireless Telecommunication Services - 15.5% | |||
| Millicom International Cellular SA | 37,800 | 2,059,155 | |
| NII Holdings, Inc. (a) | 1,400,383 | 2,800,766 | |
| Shenandoah Telecommunications Co. | 242,467 | 6,813,323 | |
| Sprint Corp. (a)(b) | 1,494,485 | 13,166,413 | |
| T-Mobile U.S., Inc. (a) | 986,297 | 61,673,151 | |
| Telephone & Data Systems, Inc. | 611,964 | 16,541,387 | |
| U.S. Cellular Corp. (a) | 378,700 | 14,159,593 | |
| 117,213,788 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $624,698,166) | 755,939,513 | ||
| Money Market Funds - 10.8% | |||
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | |||
| (Cost $82,165,145) | 82,159,370 | 82,175,802 | |
| TOTAL INVESTMENT PORTFOLIO - 110.6% | |||
| (Cost $706,863,311) | 838,115,315 | ||
| NET OTHER ASSETS (LIABILITIES) - (10.6)% | (80,417,476) | ||
| NET ASSETS - 100% | $757,697,839 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Investment made with cash collateral received from securities on loan.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $48,378 |
| Fidelity Securities Lending Cash Central Fund | 964,047 |
| Total | $1,012,425 |
Other Affiliated Issuers
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:
| Affiliate | Value, beginning of period | Purchases | Sales Proceeds* | Dividend Income | Value, end of period |
| Lumos Networks Corp. | $11,351,399 | $12,670,357 | $12,902,055 | $-- | $-- |
| Total | $11,351,399 | $12,670,357 | $12,902,055 | $-- | $-- |
* Includes the value of securities delivered through in-kind transactions.
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $75,668,187) — See accompanying schedule: Unaffiliated issuers (cost $624,698,166) | $755,939,513 | |
| Fidelity Central Funds (cost $82,165,145) | 82,175,802 | |
| Total Investments (cost $706,863,311) | $838,115,315 | |
| Receivable for investments sold | 7,109,419 | |
| Receivable for fund shares sold | 832,296 | |
| Dividends receivable | 165,679 | |
| Distributions receivable from Fidelity Central Funds | 136,834 | |
| Prepaid expenses | 3,753 | |
| Other receivables | 42,229 | |
| Total assets | 846,405,525 | |
| Liabilities | ||
| Payable to custodian bank | $15,840 | |
| Payable for fund shares redeemed | 4,473,657 | |
| Accrued management fee | 356,658 | |
| Distribution and service plan fees payable | 20,931 | |
| Notes payable to affiliates | 1,473,000 | |
| Other affiliated payables | 145,554 | |
| Other payables and accrued expenses | 64,383 | |
| Collateral on securities loaned | 82,157,663 | |
| Total liabilities | 88,707,686 | |
| Net Assets | $757,697,839 | |
| Net Assets consist of: | ||
| Paid in capital | $617,696,989 | |
| Undistributed net investment income | 2,151,795 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 6,600,480 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 131,248,575 | |
| Net Assets | $757,697,839 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($31,966,150 ÷ 459,218 shares) | $69.61 | |
| Maximum offering price per share (100/94.25 of $69.61) | $73.86 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($6,933,398 ÷ 100,007 shares) | $69.33 | |
| Maximum offering price per share (100/96.50 of $69.33) | $71.84 | |
| Class C: | ||
| Net Asset Value and offering price per share ($13,528,403 ÷ 195,378 shares)(a) | $69.24 | |
| Telecommunications: | ||
| Net Asset Value, offering price and redemption price per share ($690,720,164 ÷ 9,872,032 shares) | $69.97 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($14,549,724 ÷ 208,394 shares) | $69.82 |
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $19,894,128 | |
| Interest | 145,002 | |
| Income from Fidelity Central Funds | 1,012,425 | |
| Total income | 21,051,555 | |
| Expenses | ||
| Management fee | $4,796,107 | |
| Transfer agent fees | 1,622,285 | |
| Distribution and service plan fees | 236,281 | |
| Accounting and security lending fees | 311,791 | |
| Custodian fees and expenses | 64,856 | |
| Independent trustees' fees and expenses | 19,001 | |
| Registration fees | 135,131 | |
| Audit | 60,150 | |
| Legal | 11,369 | |
| Interest | 7,680 | |
| Miscellaneous | 9,681 | |
| Total expenses before reductions | 7,274,332 | |
| Expense reductions | (159,988) | 7,114,344 |
| Net investment income (loss) | 13,937,211 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 47,209,205 | |
| Redemptions in-kind with affiliated entities (including gain from Other affiliated issuers of $349,270) | 12,655,696 | |
| Fidelity Central Funds | 7,139 | |
| Other affiliated issuers | 1,672,544 | |
| Foreign currency transactions | (11,742) | |
| Total net realized gain (loss) | 61,532,842 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 57,549,433 | |
| Assets and liabilities in foreign currencies | 124 | |
| Total change in net unrealized appreciation (depreciation) | 57,549,557 | |
| Net gain (loss) | 119,082,399 | |
| Net increase (decrease) in net assets resulting from operations | $133,019,610 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $13,937,211 | $7,986,783 |
| Net realized gain (loss) | 61,532,842 | (87,999) |
| Change in net unrealized appreciation (depreciation) | 57,549,557 | 9,807,560 |
| Net increase (decrease) in net assets resulting from operations | 133,019,610 | 17,706,344 |
| Distributions to shareholders from net investment income | (13,294,404) | (6,674,056) |
| Distributions to shareholders from net realized gain | (31,675,318) | (4,168,398) |
| Total distributions | (44,969,722) | (10,842,454) |
| Share transactions - net increase (decrease) | (55,515,132) | 345,924,755 |
| Redemption fees | 54,102 | 10,972 |
| Total increase (decrease) in net assets | 32,588,858 | 352,799,617 |
| Net Assets | ||
| Beginning of period | 725,108,981 | 372,309,364 |
| End of period | $757,697,839 | $725,108,981 |
| Other Information | ||
| Undistributed net investment income end of period | $2,151,795 | $1,545,938 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Telecommunications Portfolio Class A
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $62.32 | $63.26 | $58.71 | $51.58 | $46.12 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .88 | .81 | .76 | 1.76C | .99 |
| Net realized and unrealized gain (loss) | 10.68 | (.76)D | 5.83 | 6.48 | 5.43 |
| Total from investment operations | 11.56 | .05 | 6.59 | 8.24 | 6.42 |
| Distributions from net investment income | (1.11) | (.54) | (2.04) | (1.11) | (.96) |
| Distributions from net realized gain | (3.16) | (.45) | – | (.01) | – |
| Total distributions | (4.27) | (.99) | (2.04) | (1.11)E | (.96) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $69.61 | $62.32 | $63.26 | $58.71 | $51.58 |
| Total ReturnG,H | 18.65% | .16% | 11.54% | 16.00% | 13.97% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | 1.14% | 1.15% | 1.15% | 1.18% | 1.18% |
| Expenses net of fee waivers, if any | 1.14% | 1.15% | 1.15% | 1.18% | 1.18% |
| Expenses net of all reductions | 1.12% | 1.15% | 1.15% | 1.15% | 1.17% |
| Net investment income (loss) | 1.28% | 1.33% | 1.26% | 3.08%C | 2.01% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $31,966 | $13,032 | $11,052 | $7,712 | $6,449 |
| Portfolio turnover rateK | 105%L | 51% | 94%L | 111% | 76% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.95 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.43%.
D The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
E Total distributions of $1.11 per share is comprised of distributions from net investment income of $1.106 and distributions from net realized gain of $.005 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Total returns do not include the effect of the sales charges.
I Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
L Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Telecommunications Portfolio Class T
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $61.95 | $63.04 | $58.50 | $51.41 | $46.01 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .65 | .61 | .57 | 1.59C | .85 |
| Net realized and unrealized gain (loss) | 10.62 | (.76)D | 5.81 | 6.44 | 5.39 |
| Total from investment operations | 11.27 | (.15) | 6.38 | 8.03 | 6.24 |
| Distributions from net investment income | (.73) | (.49) | (1.84) | (.94) | (.84) |
| Distributions from net realized gain | (3.16) | (.45) | – | (.01) | – |
| Total distributions | (3.89) | (.94) | (1.84) | (.94)E | (.84) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $69.33 | $61.95 | $63.04 | $58.50 | $51.41 |
| Total ReturnG,H | 18.26% | (.16)% | 11.19% | 15.64% | 13.61% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | 1.46% | 1.47% | 1.47% | 1.48% | 1.48% |
| Expenses net of fee waivers, if any | 1.46% | 1.47% | 1.47% | 1.48% | 1.48% |
| Expenses net of all reductions | 1.44% | 1.46% | 1.46% | 1.45% | 1.46% |
| Net investment income (loss) | .96% | 1.01% | .94% | 2.78%C | 1.72% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $6,933 | $8,280 | $5,095 | $4,344 | $4,237 |
| Portfolio turnover rateK | 105%L | 51% | 94%L | 111% | 76% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.94 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.13%.
D The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
E Total distributions of $.94 per share is comprised of distributions from net investment income of $.939 and distributions from net realized gain of $.005 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Total returns do not include the effect of the sales charges.
I Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
L Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Telecommunications Portfolio Class C
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $62.10 | $63.04 | $58.54 | $51.47 | $46.02 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .37 | .36 | .34 | 1.36C | .63 |
| Net realized and unrealized gain (loss) | 10.62 | (.75)D | 5.80 | 6.46 | 5.41 |
| Total from investment operations | 10.99 | (.39) | 6.14 | 7.82 | 6.04 |
| Distributions from net investment income | (.69) | (.10) | (1.64) | (.74) | (.59) |
| Distributions from net realized gain | (3.16) | (.45) | – | (.01) | – |
| Total distributions | (3.85) | (.55) | (1.64) | (.75) | (.59) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $69.24 | $62.10 | $63.04 | $58.54 | $51.47 |
| Total ReturnF,G | 17.77% | (.57)% | 10.75% | 15.20% | 13.14% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.88% | 1.89% | 1.85% | 1.88% | 1.90% |
| Expenses net of fee waivers, if any | 1.88% | 1.89% | 1.85% | 1.88% | 1.90% |
| Expenses net of all reductions | 1.86% | 1.88% | 1.85% | 1.85% | 1.89% |
| Net investment income (loss) | .54% | .60% | .56% | 2.38%C | 1.29% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $13,528 | $7,735 | $7,074 | $5,523 | $4,353 |
| Portfolio turnover rateJ | 105%K | 51% | 94%K | 111% | 76% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.94 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .73%.
D The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Total returns do not include the effect of the contingent deferred sales charge.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Telecommunications Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $62.58 | $63.54 | $58.94 | $51.75 | $46.26 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.12 | 1.02 | .96 | 1.96C | 1.15 |
| Net realized and unrealized gain (loss) | 10.74 | (.77)D | 5.85 | 6.51 | 5.43 |
| Total from investment operations | 11.86 | .25 | 6.81 | 8.47 | 6.58 |
| Distributions from net investment income | (1.31) | (.76) | (2.21) | (1.28) | (1.09) |
| Distributions from net realized gain | (3.16) | (.45) | – | (.01) | – |
| Total distributions | (4.47) | (1.21) | (2.21) | (1.28)E | (1.09) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $69.97 | $62.58 | $63.54 | $58.94 | $51.75 |
| Total ReturnG | 19.06% | .49% | 11.90% | 16.40% | 14.30% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .80% | .82% | .83% | .85% | .87% |
| Expenses net of fee waivers, if any | .80% | .81% | .83% | .85% | .87% |
| Expenses net of all reductions | .78% | .81% | .82% | .82% | .85% |
| Net investment income (loss) | 1.62% | 1.67% | 1.58% | 3.41%C | 2.33% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $690,720 | $689,600 | $346,174 | $343,548 | $377,841 |
| Portfolio turnover rateJ | 105%K | 51% | 94%K | 111% | 76% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.95 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.76%.
D The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
E Total distributions of $1.28 per share is comprised of distributions from net investment income of $1.275 and distributions from net realized gain of $.005 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Telecommunications Portfolio Class I
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $62.46 | $63.38 | $58.80 | $51.65 | $46.20 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.12 | 1.02 | .94 | 1.93C | 1.17 |
| Net realized and unrealized gain (loss) | 10.70 | (.76)D | 5.83 | 6.48 | 5.42 |
| Total from investment operations | 11.82 | .26 | 6.77 | 8.41 | 6.59 |
| Distributions from net investment income | (1.30) | (.73) | (2.19) | (1.25) | (1.14) |
| Distributions from net realized gain | (3.16) | (.45) | – | (.01) | – |
| Total distributions | (4.46) | (1.18) | (2.19) | (1.26) | (1.14) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $69.82 | $62.46 | $63.38 | $58.80 | $51.65 |
| Total ReturnF | 19.03% | .51% | 11.85% | 16.30% | 14.33% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .80% | .82% | .86% | .91% | .85% |
| Expenses net of fee waivers, if any | .80% | .82% | .86% | .91% | .85% |
| Expenses net of all reductions | .78% | .81% | .85% | .88% | .83% |
| Net investment income (loss) | 1.62% | 1.67% | 1.55% | 3.35%C | 2.35% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $14,550 | $6,197 | $2,505 | $1,604 | $2,641 |
| Portfolio turnover rateI | 105%J | 51% | 94%J | 111% | 76% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.95 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.70%.
D The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2017
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Telecommunications and Class I shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class.
After the close of business on June 24, 2016, all outstanding Class B shares were converted to Class A shares. All current fiscal period dollar and share amounts for Class B presented in the Notes to Financial Statements are for the period March 1, 2016 through June 24, 2016.
In March 2017, the Board of Trustees approved a change in the name of Class T to Class M effective after the close of business on March 24, 2017.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Fund represent a return of capital or capital gain. The Fund determines the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2017, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, redemptions in kind, deferred trustees compensation and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $144,418,791 |
| Gross unrealized depreciation | (20,292,166) |
| Net unrealized appreciation (depreciation) on securities | $124,126,625 |
| Tax Cost | $713,988,690 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $2,726,551 |
| Undistributed long-term capital gain | $13,151,561 |
| Net unrealized appreciation (depreciation) on securities and other investments | $124,123,196 |
The tax character of distributions paid was as follows:
| February 28, 2017 | February 29, 2016 | |
| Ordinary Income | $33,284,559 | $ 7,554,050 |
| Long-term Capital Gains | 11,685,163 | 3,288,404 |
| Total | $44,969,722 | $ 10,842,454 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital. In November 2016, the Board of Trustees approved the elimination of these redemption fees effective December 12, 2016.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, aggregated $900,357,820 and $922,943,190, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution Fee | Service Fee | Total Fees | Retained by FDC | |
| Class A | -% | .25% | $76,395 | $– |
| Class T | .25% | .25% | 39,876 | – |
| Class B | .75% | .25% | 731 | 550 |
| Class C | .75% | .25% | 119,279 | 32,166 |
| $236,281 | $32,716 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $37,482 |
| Class T | 3,694 |
| Class B(a) | 1 |
| Class C(a) | 2,967 |
| $44,144 |
(a) When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc., (FIIOC), an affiliate of the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $81,938 | .27 |
| Class T | 27,593 | .35 |
| Class B | 182 | .25 |
| Class C | 30,773 | .26 |
| Telecommunications | 1,454,952 | .18 |
| Class I | 26,847 | .19 |
| $1,622,285 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $47,168 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. Any open loans, including accrued interest, at period end are presented under the caption "Notes payable to affiliates" in the Fund's Statement of Assets and Liabilities. The Fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense |
| Borrower | $7,053,902 | .63% | $6,254 |
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Redemptions In-Kind. During the period, 805,095 shares of the Fund held by an affiliated entity were redeemed in-kind for investments and cash with a value of $53,345,591. The net realized gain of $12,655,696 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 11: Share Transactions. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $2,591 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $964,047.
8. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average loan balance during the period for which loans were outstanding amounted to $11,409,800. The weighted average interest rate was .90%. The interest expense amounted to $1,426 under the bank borrowing program. At period end, there were no bank borrowings outstanding.
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $154,305 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of the fund-level operating expenses in the amount of $5,683.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| From net investment income | ||
| Class A | $455,173 | $101,836 |
| Class T | 67,280 | 64,003 |
| Class B | – | 172 |
| Class C | 124,522 | 12,147 |
| Telecommunications | 12,452,745 | 6,462,442 |
| Class I | 194,684 | 33,456 |
| Total | $13,294,404 | $6,674,056 |
| From net realized gain | ||
| Class A | $1,308,078 | $85,263 |
| Class T | 287,783 | 59,140 |
| Class B | – | 2,151 |
| Class C | 572,522 | 53,589 |
| Telecommunications | 29,029,256 | 3,948,074 |
| Class I | 477,679 | 20,181 |
| Total | $31,675,318 | $4,168,398 |
11. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
| Shares | Shares | Dollars | Dollars | |
| Year ended February 28, 2017 | Year ended February 29, 2016 | Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Class A | ||||
| Shares sold | 521,786 | 91,221 | $35,388,038 | $5,573,645 |
| Reinvestment of distributions | 24,324 | 3,029 | 1,671,796 | 178,902 |
| Shares redeemed | (296,004) | (59,841) | (20,518,786) | (3,630,540) |
| Net increase (decrease) | 250,106 | 34,409 | $16,541,048 | $2,122,007 |
| Class T | ||||
| Shares sold | 82,122 | 70,704 | $5,468,018 | $4,245,232 |
| Reinvestment of distributions | 5,039 | 2,087 | 345,400 | 122,479 |
| Shares redeemed | (120,797) | (19,976) | (8,187,323) | (1,205,139) |
| Net increase (decrease) | (33,636) | 52,815 | $(2,373,905) | $3,162,572 |
| Class B | ||||
| Shares sold | 975 | 129 | $64,042 | $7,453 |
| Reinvestment of distributions | – | 39 | – | 2,323 |
| Shares redeemed | (5,216) | (2,377) | (349,278) | (146,261) |
| Net increase (decrease) | (4,241) | (2,209) | $(285,236) | $(136,485) |
| Class C | ||||
| Shares sold | 135,768 | 48,243 | $9,283,679 | $2,966,823 |
| Reinvestment of distributions | 8,829 | 861 | 604,885 | 50,662 |
| Shares redeemed | (73,776) | (36,747) | (5,085,863) | (2,199,789) |
| Net increase (decrease) | 70,821 | 12,357 | $4,802,701 | $817,696 |
| Telecommunications | ||||
| Shares sold | 6,206,062 | 6,996,236 | $424,943,213 | $423,896,658 |
| Reinvestment of distributions | 578,869 | 169,238 | 39,940,628 | 10,035,177 |
| Shares redeemed | (7,931,924)(a) | (1,594,679) | (546,713,599)(a) | (97,516,561) |
| Net increase (decrease) | (1,146,993) | 5,570,795 | $(81,829,758) | $336,415,274 |
| Class I | ||||
| Shares sold | 536,498 | 91,633 | $37,085,732 | $5,507,038 |
| Reinvestment of distributions | 8,128 | 779 | 559,963 | 46,233 |
| Shares redeemed | (435,454) | (32,720) | (30,015,677) | (2,009,580) |
| Net increase (decrease) | 109,172 | 59,692 | $7,630,018 | $3,543,691 |
(a) Amount includes in-kind redemptions (see Note 5: Redemptions In-Kind).
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, Fidelity VIP FundsManager 60% Portfolio was the owner of record of approximately 12% of the total outstanding shares of the Fund. Mutual funds managed by the investment adviser or its affiliates were the owners of record, in the aggregate, of approximately 26% of the total outstanding shares of the Fund.
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio and Telecommunications Portfolio:
In our opinion, the accompanying statements of assets and liabilities (consolidated statement of assets and liabilities for Gold Portfolio), including the schedules of investments (consolidated schedule of investments for Gold Portfolio), and the related statements of operations (consolidated statement of operations for Gold Portfolio) and of changes in net assets (consolidated changes in net assets for Gold Portfolio) and the financial highlights (consolidated financial highlights for Gold Portfolio) present fairly, in all material respects, the financial positions of Consumer Staples Portfolio, Gold Portfolio, Materials Portfolio and Telecommunications Portfolio (funds of Fidelity Select Portfolios) as of February 28, 2017, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of February 28, 2017 by correspondence with the custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2017
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 90 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the funds is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Each fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-877-208-0098.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
* Determined to be an "Interested Trustee" by virtue of, among other things, his or her affiliation with the trust or various entities under common control with SelectCo.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed the oil refining, drilling and marketing of petroleum products (including specialty petroleum products), recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present) and serves as its President and CEO. Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006. Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Trustee or Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006), and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue serves as a Member (2012-present) and Co-Chairman (2016-present) of the Board of Directors of United Way of New York, Member of the Board of Directors of NYC Leadership Academy (2012-present) and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services), Treasurer of United Way of New York (2012-2016), and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Carol B. Tomé (1957)
Year of Election or Appointment: 2017
Member of the Advisory Board
Ms. Tomé also serves as Trustee or Member of the Advisory Board of other Fidelity® funds. Ms. Tomé is Chief Financial Officer (2001-present) and Executive Vice President of Corporate Services (2007-present) of The Home Depot, Inc. (home improvement retailer) and a Director (2003-present) and Chair of the Audit Committee (2004-present) of United Parcel Service, Inc. (package delivery and supply chain management). Previously, Ms. Tomé served as Senior Vice President of Finance and Accounting/Treasurer (2000-2007) and Vice President and Treasurer (1995-2000) of The Home Depot, Inc. and Chair of the Board (2010-2012), Vice Chair of the Board (2009 and 2013), and a Director (2008-2013) of the Federal Reserve Bank of Atlanta. Ms. Tomé is also a director or trustee of many community and professional organizations.
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Interim Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (UK) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
Jeffrey S. Christian (1961)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Christian also serves as Assistant Treasurer of other funds. Mr. Christian is an employee of Fidelity Investments (2003-present).
William C. Coffey (1969)
Year of Election or Appointment: 2009
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Senior Vice President of Fidelity Management & Research Company (FMR) (investment adviser firm, 2016), Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of FMR (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
Colm A. Hogan (1973)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan is an employee of Fidelity Investments (2005-present). Mr. Colm A. Hogan is not related to Mr. Brian B. Hogan.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche (accounting firm, 2005-2013).
Renee Stagnone (1975)
Year of Election or Appointment: 2016
Assistant Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2016 to February 28, 2017).
Actual Expenses
The first line of the accompanying table for each class of each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of each fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio-A | Beginning Account Value September 1, 2016 | Ending Account Value February 28, 2017 | Expenses Paid During Period-B September 1, 2016 to February 28, 2017 | |
| Consumer Staples Portfolio | ||||
| Class A | 2.11% | |||
| Actual | $1,000.00 | $1,033.70 | $10.64 | |
| Hypothetical-C | $1,000.00 | $1,014.33 | $10.54 | |
| Class T | 2.65% | |||
| Actual | $1,000.00 | $1,032.40 | $13.35 | |
| Hypothetical-C | $1,000.00 | $1,011.65 | $13.22 | |
| Class C | 3.52% | |||
| Actual | $1,000.00 | $1,029.90 | $17.72 | |
| Hypothetical-C | $1,000.00 | $1,007.34 | $17.52 | |
| Consumer Staples | 1.69% | |||
| Actual | $1,000.00 | $1,035.20 | $8.53 | |
| Hypothetical-C | $1,000.00 | $1,016.41 | $8.45 | |
| Class I | 1.54% | |||
| Actual | $1,000.00 | $1,035.00 | $7.77 | |
| Hypothetical-C | $1,000.00 | $1,017.16 | $7.70 | |
| Gold Portfolio | ||||
| Class A | 1.16% | |||
| Actual | $1,000.00 | $906.70 | $5.48 | |
| Hypothetical-C | $1,000.00 | $1,019.04 | $5.81 | |
| Class T | 1.46% | |||
| Actual | $1,000.00 | $905.00 | $6.90 | |
| Hypothetical-C | $1,000.00 | $1,017.55 | $7.30 | |
| Class C | 1.83% | |||
| Actual | $1,000.00 | $903.50 | $8.64 | |
| Hypothetical-C | $1,000.00 | $1,015.72 | $9.15 | |
| Gold | .84% | |||
| Actual | $1,000.00 | $908.10 | $3.97 | |
| Hypothetical-C | $1,000.00 | $1,020.63 | $4.21 | |
| Class I | .84% | |||
| Actual | $1,000.00 | $908.50 | $3.97 | |
| Hypothetical-C | $1,000.00 | $1,020.63 | $4.21 | |
| Materials Portfolio | ||||
| Class A | 1.07% | |||
| Actual | $1,000.00 | $1,103.20 | $5.58 | |
| Hypothetical-C | $1,000.00 | $1,019.49 | $5.36 | |
| Class T | 1.38% | |||
| Actual | $1,000.00 | $1,101.50 | $7.19 | |
| Hypothetical-C | $1,000.00 | $1,017.95 | $6.90 | |
| Class C | 1.82% | |||
| Actual | $1,000.00 | $1,099.00 | $9.47 | |
| Hypothetical-C | $1,000.00 | $1,015.77 | $9.10 | |
| Materials | .81% | |||
| Actual | $1,000.00 | $1,104.50 | $4.23 | |
| Hypothetical-C | $1,000.00 | $1,020.78 | $4.06 | |
| Class I | .79% | |||
| Actual | $1,000.00 | $1,104.60 | $4.12 | |
| Hypothetical-C | $1,000.00 | $1,020.88 | $3.96 | |
| Telecommunications Portfolio | ||||
| Class A | 2.10% | |||
| Actual | $1,000.00 | $1,060.40 | $10.73 | |
| Hypothetical-C | $1,000.00 | $1,014.38 | $10.49 | |
| Class T | 3.27% | |||
| Actual | $1,000.00 | $1,058.50 | $16.69 | |
| Hypothetical-C | $1,000.00 | $1,008.58 | $16.29 | |
| Class C | 3.45% | |||
| Actual | $1,000.00 | $1,056.30 | $17.59 | |
| Hypothetical-C | $1,000.00 | $1,007.69 | $17.17 | |
| Telecommunications | 1.74% | |||
| Actual | $1,000.00 | $1,062.20 | $8.90 | |
| Hypothetical-C | $1,000.00 | $1,016.17 | $8.70 | |
| Class I | 1.58% | |||
| Actual | $1,000.00 | $1,062.10 | $8.08 | |
| Hypothetical-C | $1,000.00 | $1,016.96 | $7.90 | |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/ 365 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains | |
| Consumer Staples Portfolio | ||||
| Class A | 4/13/17 | 4/12/17 | $0.128 | $1.337 |
| Class M | 4/13/17 | 4/12/17 | $0.109 | $1.337 |
| Class C | 4/13/17 | 4/12/17 | $0.034 | $1.337 |
| Consumer Staples | 4/13/17 | 4/12/17 | $0.198 | $1.337 |
| Class I | 4/13/17 | 4/12/17 | $0.204 | $1.337 |
| Gold Portfolio | ||||
| Class A | 4/13/17 | 4/12/17 | $0.000 | $0.034 |
| Class M | 4/13/17 | 4/12/17 | $0.000 | $0.026 |
| Class C | 4/13/17 | 4/12/17 | $0.000 | $0.015 |
| Gold | 4/13/17 | 4/12/17 | $0.000 | $0.046 |
| Class I | 4/13/17 | 4/12/17 | $0.000 | $0.048 |
| Materials Portfolio | ||||
| Class A | 4/13/17 | 4/12/17 | $0.104 | $0.798 |
| Class M | 4/13/17 | 4/12/17 | $0.080 | $0.798 |
| Class C | 4/13/17 | 4/12/17 | $0.021 | $0.798 |
| Materials | 4/13/17 | 4/12/17 | $0.147 | $0.798 |
| Class I | 4/13/17 | 4/12/17 | $0.154 | $0.798 |
| Telecommunications Portfolio | ||||
| Class A | 4/13/17 | 4/12/17 | $0.186 | $1.434 |
| Class M | 4/13/17 | 4/12/17 | $0.144 | $1.434 |
| Class C | 4/13/17 | 4/12/17 | $0.092 | $1.434 |
| Telecommunications | 4/13/17 | 4/12/17 | $0.230 | $1.434 |
| Class I | 4/13/17 | 4/12/17 | $0.232 | $1.434 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2017 or, if subsequently determined to be different, the net capital gain of such year.
| Consumer Staples Portfolio | $94,968,443 |
| Materials Portfolio | $15,928,366 |
| Telecommunications Portfolio | $24,836,724 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| Class A | Class T | Class C | Retail | Class I | |
| Consumer Staples Portfolio | |||||
| April 2016 | 100% | 100% | 100% | 100% | 99% |
| December 2016 | 83% | 92% | 100% | 76% | 75% |
| Gold Portfolio | |||||
| April 2016 | 4% | 4% | 5% | 3% | 3% |
| December 2016 | 3% | 4% | 4% | 3% | 3% |
| Materials Portfolio | |||||
| December 2016 | 100% | 100% | 100% | 100% | 100% |
| Telecommunications Portfolio | |||||
| April 2016 | 100% | 100% | 100% | 99% | 93% |
| December 2016 | 46% | 51% | 52% | 43% | 43% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| Class A | Class T | Class C | Retail | Class I | |
| Consumer Staples Portfolio | |||||
| April 2016 | 100% | 100% | 100% | 100% | 100% |
| December 2016 | 100% | 100% | 100% | 100% | 100% |
| Gold Portfolio | |||||
| April 2016 | 27% | 34% | 40% | 25% | 23% |
| December 2016 | 27% | 31% | 34% | 24% | 24% |
| Materials Portfolio | |||||
| December 2016 | 100% | 100% | 100% | 100% | 100% |
| Telecommunications Portfolio | |||||
| April 2016 | 100% | 100% | 100% | 99% | 94% |
| December 2016 | 50% | 56% | 57% | 48% | 48% |
The amounts per share which represent income derived from sources within, and taxes paid to, foreign countries or possessions of the United States are as follows:
| Pay Date | Income | Taxes | |
| Gold Portfolio | |||
| Class A | 04/18/16 | $0.0752 | $0.0037 |
| Class A | 12/19/16 | $0.0687 | $0.0093 |
| Class T | 04/18/16 | $0.0596 | $0.0037 |
| Class T | 12/19/16 | $0.0603 | $0.0093 |
| Class C | 04/18/16 | $0.0515 | $0.0037 |
| Class C | 12/19/16 | $0.0543 | $0.0093 |
| Gold | 04/18/16 | $0.0840 | $0.0037 |
| Gold | 12/19/16 | $0.0789 | $0.0093 |
| Class I | 04/18/16 | $0.0901 | $0.0037 |
| Class I | 12/19/16 | $0.0787 | $0.0093 |
The funds will notify shareholders in January 2018 of amounts for use in preparing 2017 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Consumer Staples Portfolio
Gold Portfolio
Materials Portfolio
Telecommunications Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. SelectCo and the sub-advisers are collectively referred to herein as the Investment Advisers. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2017 meeting, the Board unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of the Investment Advisers as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the investment personnel compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the Investment Advisers' investment staffs, including their size, education, experience, and resources, as well as Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board considered that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, compliance, and technology and operations capabilities and resources, which are integral parts of the investment management process.Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians, subcustodians, and pricing vendors; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs; (iv) broadening eligibility requirements for certain lower-priced share classes of, and streamlining the fee structure for, certain existing equity index funds; (v) lowering expense caps for certain existing funds and classes to reduce expenses paid by shareholders; (vi) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vii) rationalizing product lines and gaining increased efficiencies through fund mergers and share class consolidations; (viii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (ix) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; and (x) accelerating the conversion of all remaining Class B shares to Class A shares, which have a lower expense structure.Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.The Board took into account discussions with representatives of SelectCo about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Each of Consumer Staples Portfolio, Materials Portfolio, and Telecommunications Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2016, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address each such fund's performance.In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing fund share classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors, including the following: general market conditions; issuer-specific information; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2016.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should continue to benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Consumer Staples Portfolio
Gold Portfolio
Materials Portfolio
Telecommunications Portfolio
ASGMT-ANN-0417
1.845780.110
Fidelity® Select Portfolios® Consumer Staples Portfolio Annual Report February 28, 2017 |
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Contents
Board Approval of Investment Advisory Contracts and Management Fees |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2017 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Fund nor Fidelity Distributors Corporation is a bank.
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Consumer Staples Portfolio | 12.24% | 11.66% | 9.93% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Consumer Staples Portfolio, a class of the fund, on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $25,778 | Consumer Staples Portfolio | |
| $20,834 | S&P 500® Index | |
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union –recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Robert Lee: For the year, the fund's share classes (excluding sales charges, if applicable) rose roughly 11% to 12%, compared with the 12.16% return of the MSCI sector index, and significantly lagging the broader S&P 500® index. Against stable global economic data and improving prices for energy and certain other commodities, consumer staples came up short of the broad market this period. In addition, Trump's election ignited investors' hopes of potential business-friendly reforms, along with their expectations for a rise in inflation. As a result, typically more-defensive areas of the market, including consumer staples, suffered amid a shift toward riskier assets. Versus the MSCI sector index, the fund’s largest relative detractors were sizable stakes in CVS Health and Kroger. Shares of pharmacy retailer and health care company CVS fell on downward earnings guidance, as the firm lost some large contracts to competitor Walgreens Boots Alliance – another large fund holding. Meanwhile, grocer Kroger also reduced its earnings estimates, as food deflation led to slower sales growth and less fixed-cost leverage, and as investors began to fear an acceleration in price competition within the food retail industry. Conversely, a non-index stake in U.K.-based British American Tobacco (BAT) was by far the fund’s biggest individual contributor and among its largest holdings. The stock returned 22% for the fund, partly helped by news in January that BAT would buy the remaining stake in competitor Reynolds American that it did not own, making it the world’s largest publicly traded tobacco company. Bunge, a producer of fertilizer, processed grains and soybeans, also was significantly additive. Favorable crop conditions in key markets increased earnings expectations for the global agribusiness and food company.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Philip Morris International, Inc. | 11.7 | 4.1 |
| British American Tobacco PLC sponsored ADR | 11.6 | 10.9 |
| CVS Health Corp. | 8.4 | 9.2 |
| Kroger Co. | 6.0 | 6.2 |
| Reynolds American, Inc. | 5.2 | 4.8 |
| Altria Group, Inc. | 4.9 | 4.1 |
| The Coca-Cola Co. | 4.9 | 3.9 |
| Estee Lauder Companies, Inc. Class A | 4.8 | 0.8 |
| Procter & Gamble Co. | 3.9 | 12.3 |
| Colgate-Palmolive Co. | 3.8 | 2.7 |
| 65.2 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Tobacco | 33.8% | |
| Food & Staples Retailing | 17.6% | |
| Beverages | 16.6% | |
| Food Products | 10.4% | |
| Personal Products | 9.7% | |
| All Others* | 11.9% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Food & Staples Retailing | 24.9% | |
| Tobacco | 24.2% | |
| Beverages | 17.0% | |
| Household Products | 16.2% | |
| Food Products | 11.1% | |
| All Others* | 6.6% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 97.7% | |||
| Shares | Value | ||
| Beverages - 16.4% | |||
| Brewers - 2.8% | |||
| Anheuser-Busch InBev SA NV | 670,590 | $73,353,629 | |
| China Resources Beer Holdings Co. Ltd. (a) | 3,468,000 | 7,871,563 | |
| 81,225,192 | |||
| Distillers & Vintners - 3.2% | |||
| Brown-Forman Corp. Class B (non-vtg.) | 195,168 | 9,516,392 | |
| Constellation Brands, Inc. Class A (sub. vtg.) | 213,600 | 33,921,816 | |
| Kweichow Moutai Co. Ltd. (A Shares) | 268,853 | 13,883,937 | |
| Pernod Ricard SA | 238,376 | 27,248,584 | |
| Wuliangye Yibin Co. Ltd. Class A | 1,314,309 | 7,570,757 | |
| 92,141,486 | |||
| Soft Drinks - 10.4% | |||
| Britvic PLC | 2,255,964 | 17,677,661 | |
| Coca-Cola Bottling Co. Consolidated | 150,638 | 25,920,281 | |
| Coca-Cola European Partners PLC | 47,700 | 1,654,713 | |
| Coca-Cola FEMSA S.A.B. de CV sponsored ADR | 64,529 | 4,235,038 | |
| Coca-Cola Icecek Sanayi A/S | 611,162 | 5,888,088 | |
| Embotelladora Andina SA Series A sponsored ADR Series A | 287,573 | 5,808,975 | |
| Monster Beverage Corp. (a) | 2,113,502 | 87,583,523 | |
| PepsiCo, Inc. | 68,800 | 7,594,144 | |
| The Coca-Cola Co. | 3,336,218 | 139,987,707 | |
| 296,350,130 | |||
| TOTAL BEVERAGES | 469,716,808 | ||
| Food & Staples Retailing - 17.6% | |||
| Drug Retail - 11.3% | |||
| CVS Health Corp. | 2,978,903 | 240,040,004 | |
| Drogasil SA (a) | 343,600 | 6,481,814 | |
| Rite Aid Corp. (a) | 1,031,800 | 6,190,800 | |
| Walgreens Boots Alliance, Inc. | 829,524 | 71,654,283 | |
| 324,366,901 | |||
| Food Retail - 6.0% | |||
| Kroger Co. | 5,395,670 | 171,582,306 | |
| Hypermarkets & Super Centers - 0.3% | |||
| Wal-Mart Stores, Inc. | 123,800 | 8,781,134 | |
| TOTAL FOOD & STAPLES RETAILING | 504,730,341 | ||
| Food Products - 10.4% | |||
| Agricultural Products - 2.7% | |||
| Bunge Ltd. | 944,844 | 77,335,481 | |
| Packaged Foods & Meats - 7.7% | |||
| Amplify Snack Brands, Inc. (a) | 284,938 | 2,855,079 | |
| Blue Buffalo Pet Products, Inc. (a) | 490,676 | 11,992,121 | |
| Mead Johnson Nutrition Co. Class A | 240,640 | 21,125,786 | |
| Mondelez International, Inc. | 1,379,358 | 60,581,403 | |
| Nestle SA | 231,912 | 17,114,683 | |
| The Hain Celestial Group, Inc. (a) | 1,191,666 | 42,161,143 | |
| TreeHouse Foods, Inc. (a) | 762,959 | 64,912,552 | |
| 220,742,767 | |||
| TOTAL FOOD PRODUCTS | 298,078,248 | ||
| Hotels, Restaurants & Leisure - 0.7% | |||
| Restaurants - 0.7% | |||
| U.S. Foods Holding Corp. | 737,016 | 20,304,791 | |
| Household Products - 9.1% | |||
| Household Products - 9.1% | |||
| Colgate-Palmolive Co. | 1,478,196 | 107,878,744 | |
| Kimberly-Clark Corp. | 145,466 | 19,281,518 | |
| Procter & Gamble Co. | 1,231,261 | 112,130,939 | |
| Spectrum Brands Holdings, Inc. (b) | 147,105 | 19,965,091 | |
| 259,256,292 | |||
| Personal Products - 9.7% | |||
| Personal Products - 9.7% | |||
| Avon Products, Inc. (a) | 2,634,800 | 11,593,120 | |
| Coty, Inc. Class A (b) | 4,174,597 | 78,398,932 | |
| Estee Lauder Companies, Inc. Class A | 1,652,639 | 136,921,141 | |
| Herbalife Ltd. (a) | 289,610 | 16,360,069 | |
| L'Oreal SA | 82,100 | 15,268,767 | |
| Unilever NV (Certificaten Van Aandelen) (Bearer) | 295,700 | 13,997,879 | |
| Unilever PLC sponsored ADR (b) | 108,400 | 5,146,832 | |
| 277,686,740 | |||
| Tobacco - 33.8% | |||
| Tobacco - 33.8% | |||
| Altria Group, Inc. | 1,877,045 | 140,628,211 | |
| British American Tobacco PLC sponsored ADR (b) | 5,187,692 | 331,182,257 | |
| ITC Ltd. | 2,461,847 | 9,673,980 | |
| Philip Morris International, Inc. | 3,065,591 | 335,222,374 | |
| Reynolds American, Inc. | 2,431,523 | 149,708,871 | |
| 966,415,693 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $2,136,570,932) | 2,796,188,913 | ||
| Nonconvertible Preferred Stocks - 0.2% | |||
| Beverages - 0.2% | |||
| Brewers - 0.2% | |||
| Ambev SA sponsored ADR | |||
| (Cost $4,208,238) | 1,079,010 | 6,139,567 | |
| Money Market Funds - 14.5% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 67,980,774 | 67,994,370 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 345,125,337 | 345,194,362 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $413,159,142) | 413,188,732 | ||
| TOTAL INVESTMENT PORTFOLIO - 112.4% | |||
| (Cost $2,553,938,312) | 3,215,517,212 | ||
| NET OTHER ASSETS (LIABILITIES) - (12.4)% | (354,007,815) | ||
| NET ASSETS - 100% | $2,861,509,397 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $259,718 |
| Fidelity Securities Lending Cash Central Fund | 1,515,619 |
| Total | $1,775,337 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $2,796,188,913 | $2,685,240,908 | $110,948,005 | $-- |
| Nonconvertible Preferred Stocks | 6,139,567 | 6,139,567 | -- | -- |
| Money Market Funds | 413,188,732 | 413,188,732 | -- | -- |
| Total Investments in Securities: | $3,215,517,212 | $3,104,569,207 | $110,948,005 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 76.8% |
| United Kingdom | 12.5% |
| Bermuda | 2.7% |
| Belgium | 2.5% |
| France | 1.4% |
| Others (Individually Less Than 1%) | 4.1% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $336,402,757) — See accompanying schedule: Unaffiliated issuers (cost $2,140,779,170) | $2,802,328,480 | |
| Fidelity Central Funds (cost $413,159,142) | 413,188,732 | |
| Total Investments (cost $2,553,938,312) | $3,215,517,212 | |
| Receivable for investments sold | 1,470,144 | |
| Receivable for fund shares sold | 7,125,395 | |
| Dividends receivable | 3,442,599 | |
| Distributions receivable from Fidelity Central Funds | 494,426 | |
| Prepaid expenses | 12,955 | |
| Other receivables | 172,464 | |
| Total assets | 3,228,235,195 | |
| Liabilities | ||
| Payable to custodian bank | $147 | |
| Payable for investments purchased | 12,917,380 | |
| Payable for fund shares redeemed | 5,656,387 | |
| Accrued management fee | 1,282,517 | |
| Distribution and service plan fees payable | 399,595 | |
| Other affiliated payables | 499,023 | |
| Other payables and accrued expenses | 796,673 | |
| Collateral on securities loaned | 345,174,076 | |
| Total liabilities | 366,725,798 | |
| Net Assets | $2,861,509,397 | |
| Net Assets consist of: | ||
| Paid in capital | $2,161,673,906 | |
| Undistributed net investment income | 4,801,401 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 34,120,683 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 660,913,407 | |
| Net Assets | $2,861,509,397 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($522,014,431 ÷ 5,427,232 shares) | $96.18 | |
| Maximum offering price per share (100/94.25 of $96.18) | $102.05 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($89,924,874 ÷ 942,418 shares) | $95.42 | |
| Maximum offering price per share (100/96.50 of $95.42) | $98.88 | |
| Class C: | ||
| Net Asset Value and offering price per share ($308,350,291 ÷ 3,284,096 shares)(a) | $93.89 | |
| Consumer Staples: | ||
| Net Asset Value, offering price and redemption price per share ($1,665,603,660 ÷ 17,170,009 shares) | $97.01 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($275,616,141 ÷ 2,846,783 shares) | $96.82 |
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $74,847,125 | |
| Income from Fidelity Central Funds | 1,775,337 | |
| Total income | 76,622,462 | |
| Expenses | ||
| Management fee | $17,449,594 | |
| Transfer agent fees | 5,832,031 | |
| Distribution and service plan fees | 4,855,574 | |
| Accounting and security lending fees | 951,646 | |
| Custodian fees and expenses | 90,578 | |
| Independent trustees' fees and expenses | 70,084 | |
| Registration fees | 222,336 | |
| Audit | 57,796 | |
| Legal | 45,597 | |
| Interest | 3,438 | |
| Miscellaneous | 41,607 | |
| Total expenses before reductions | 29,620,281 | |
| Expense reductions | (283,563) | 29,336,718 |
| Net investment income (loss) | 47,285,744 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 132,377,339 | |
| Redemptions in-kind with affiliated entities | 85,065,706 | |
| Fidelity Central Funds | (7,690) | |
| Foreign currency transactions | (102,855) | |
| Total net realized gain (loss) | 217,332,500 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $618,798) | 57,306,523 | |
| Assets and liabilities in foreign currencies | 1,526 | |
| Total change in net unrealized appreciation (depreciation) | 57,308,049 | |
| Net gain (loss) | 274,640,549 | |
| Net increase (decrease) in net assets resulting from operations | $321,926,293 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $47,285,744 | $45,297,947 |
| Net realized gain (loss) | 217,332,500 | 141,211,479 |
| Change in net unrealized appreciation (depreciation) | 57,308,049 | (292,128,539) |
| Net increase (decrease) in net assets resulting from operations | 321,926,293 | (105,619,113) |
| Distributions to shareholders from net investment income | (44,327,157) | (42,428,021) |
| Distributions to shareholders from net realized gain | (82,139,579) | (202,474,580) |
| Total distributions | (126,466,736) | (244,902,601) |
| Share transactions - net increase (decrease) | (395,070,237) | 299,448,347 |
| Redemption fees | 44,026 | 52,041 |
| Total increase (decrease) in net assets | (199,566,654) | (51,021,326) |
| Net Assets | ||
| Beginning of period | 3,061,076,051 | 3,112,097,377 |
| End of period | $2,861,509,397 | $3,061,076,051 |
| Other Information | ||
| Undistributed net investment income end of period | $4,801,401 | $4,626,720 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Consumer Staples Portfolio Class A
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $89.78 | $101.33 | $87.93 | $85.67 | $74.90 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.28 | 1.34 | 1.37 | 1.43 | 1.26 |
| Net realized and unrealized gain (loss) | 9.12 | (4.86) | 17.28 | 7.51 | 11.73 |
| Total from investment operations | 10.40 | (3.52) | 18.65 | 8.94 | 12.99 |
| Distributions from net investment income | (1.37) | (1.31) | (1.28) | (1.44) | (1.08) |
| Distributions from net realized gain | (2.64) | (6.72) | (3.98) | (5.24) | (1.14) |
| Total distributions | (4.00)C | (8.03) | (5.25)D | (6.68) | (2.22) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $96.18 | $89.78 | $101.33 | $87.93 | $85.67 |
| Total ReturnF,G | 11.91% | (3.51)% | 21.95% | 10.53% | 17.60% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.04% | 1.04% | 1.05% | 1.06% | 1.08% |
| Expenses net of fee waivers, if any | 1.04% | 1.04% | 1.05% | 1.06% | 1.08% |
| Expenses net of all reductions | 1.03% | 1.04% | 1.05% | 1.06% | 1.08% |
| Net investment income (loss) | 1.37% | 1.45% | 1.45% | 1.61% | 1.58% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $522,014 | $470,249 | $414,151 | $329,459 | $277,329 |
| Portfolio turnover rateJ | 56%K | 63% | 42%K | 31% | 28% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $4.00 per share is comprised of distributions from net investment income of $1.365 and distributions from net realized gain of $2.636 per share.
D Total distributions of $5.25 per share is comprised of distributions from net investment income of $1.275 and distributions from net realized gain of $3.976 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Total returns do not include the effect of the sales charges.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Consumer Staples Portfolio Class T
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $89.10 | $100.61 | $87.37 | $85.18 | $74.49 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.01 | 1.08 | 1.10 | 1.18 | 1.03 |
| Net realized and unrealized gain (loss) | 9.07 | (4.83) | 17.15 | 7.46 | 11.68 |
| Total from investment operations | 10.08 | (3.75) | 18.25 | 8.64 | 12.71 |
| Distributions from net investment income | (1.12) | (1.04) | (1.04) | (1.21) | (.88) |
| Distributions from net realized gain | (2.64) | (6.72) | (3.98) | (5.24) | (1.14) |
| Total distributions | (3.76) | (7.76) | (5.01)C | (6.45) | (2.02) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $95.42 | $89.10 | $100.61 | $87.37 | $85.18 |
| Total ReturnE,F | 11.61% | (3.78)% | 21.60% | 10.23% | 17.29% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | 1.32% | 1.32% | 1.32% | 1.33% | 1.36% |
| Expenses net of fee waivers, if any | 1.32% | 1.32% | 1.32% | 1.33% | 1.36% |
| Expenses net of all reductions | 1.31% | 1.31% | 1.32% | 1.33% | 1.35% |
| Net investment income (loss) | 1.09% | 1.17% | 1.18% | 1.34% | 1.30% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $89,925 | $76,586 | $81,489 | $61,421 | $52,024 |
| Portfolio turnover rateI | 56%J | 63% | 42%J | 31% | 28% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $5.01 per share is comprised of distributions from net investment income of $1.036 and distributions from net realized gain of $3.976 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Total returns do not include the effect of the sales charges.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Consumer Staples Portfolio Class C
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $87.77 | $99.27 | $86.32 | $84.28 | $73.75 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .56 | .63 | .65 | .75 | .65 |
| Net realized and unrealized gain (loss) | 8.92 | (4.75) | 16.93 | 7.36 | 11.55 |
| Total from investment operations | 9.48 | (4.12) | 17.58 | 8.11 | 12.20 |
| Distributions from net investment income | (.73) | (.65) | (.65) | (.84) | (.53) |
| Distributions from net realized gain | (2.64) | (6.72) | (3.98) | (5.24) | (1.14) |
| Total distributions | (3.36)C | (7.38)D | (4.63) | (6.07)E | (1.67) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $93.89 | $87.77 | $99.27 | $86.32 | $84.28 |
| Total ReturnG,H | 11.07% | (4.23)% | 21.03% | 9.70% | 16.73% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | 1.80% | 1.80% | 1.80% | 1.82% | 1.83% |
| Expenses net of fee waivers, if any | 1.79% | 1.80% | 1.80% | 1.82% | 1.83% |
| Expenses net of all reductions | 1.79% | 1.79% | 1.80% | 1.81% | 1.82% |
| Net investment income (loss) | .61% | .69% | .70% | .85% | .83% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $308,350 | $250,576 | $228,151 | $164,669 | $134,966 |
| Portfolio turnover rateK | 56%L | 63% | 42%L | 31% | 28% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $3.36 per share is comprised of distributions from net investment income of $.726 and distributions from net realized gain of $2.636 per share.
D Total distributions of $7.38 per share is comprised of distributions from net investment income of $.651 and distributions from net realized gain of $6.724 per share.
E Total distributions of $6.07 per share is comprised of distributions from net investment income of $.837 and distributions from net realized gain of $5.237 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Total returns do not include the effect of the contingent deferred sales charge.
I Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
L Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Consumer Staples Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $90.48 | $102.03 | $88.51 | $86.17 | $75.29 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.56 | 1.61 | 1.64 | 1.69 | 1.48 |
| Net realized and unrealized gain (loss) | 9.20 | (4.89) | 17.40 | 7.55 | 11.82 |
| Total from investment operations | 10.76 | (3.28) | 19.04 | 9.24 | 13.30 |
| Distributions from net investment income | (1.60) | (1.55) | (1.54) | (1.66) | (1.28) |
| Distributions from net realized gain | (2.64) | (6.72) | (3.98) | (5.24) | (1.14) |
| Total distributions | (4.23)C | (8.27) | (5.52) | (6.90) | (2.42) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $97.01 | $90.48 | $102.03 | $88.51 | $86.17 |
| Total ReturnE | 12.24% | (3.25)% | 22.27% | 10.82% | 17.94% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .76% | .77% | .77% | .79% | .81% |
| Expenses net of fee waivers, if any | .76% | .77% | .77% | .79% | .81% |
| Expenses net of all reductions | .76% | .76% | .77% | .79% | .80% |
| Net investment income (loss) | 1.64% | 1.72% | 1.73% | 1.88% | 1.85% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,665,604 | $2,039,983 | $2,173,970 | $1,328,594 | $1,425,055 |
| Portfolio turnover rateH | 56%I | 63% | 42%I | 31% | 28% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $4.23 per share is comprised of distributions from net investment income of $1.596 and distributions from net realized gain of $2.636 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Consumer Staples Portfolio Class I
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $90.34 | $101.91 | $88.33 | $85.92 | $75.14 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.54 | 1.60 | 1.59 | 1.66 | 1.45 |
| Net realized and unrealized gain (loss) | 9.19 | (4.89) | 17.40 | 7.53 | 11.79 |
| Total from investment operations | 10.73 | (3.29) | 18.99 | 9.19 | 13.24 |
| Distributions from net investment income | (1.61) | (1.55) | (1.44) | (1.54) | (1.32) |
| Distributions from net realized gain | (2.64) | (6.72) | (3.98) | (5.24) | (1.14) |
| Total distributions | (4.25) | (8.28)C | (5.41)D | (6.78) | (2.46) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $96.82 | $90.34 | $101.91 | $88.33 | $85.92 |
| Total ReturnF | 12.22% | (3.26)% | 22.26% | 10.80% | 17.90% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .78% | .78% | .80% | .82% | .85% |
| Expenses net of fee waivers, if any | .78% | .77% | .80% | .82% | .85% |
| Expenses net of all reductions | .77% | .77% | .80% | .82% | .84% |
| Net investment income (loss) | 1.63% | 1.71% | 1.70% | 1.85% | 1.81% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $275,616 | $216,836 | $198,538 | $154,271 | $378,731 |
| Portfolio turnover rateI | 56%J | 63% | 42%J | 31% | 28% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $8.28 per share is comprised of distributions from net investment income of $1.553 and distributions from net realized gain of $6.724 per share.
D Total distributions of $5.41 per share is comprised of distributions from net investment income of $1.436 and distributions from net realized gain of $3.976 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2017
1. Organization.
Consumer Staples Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Consumer Staples and Class I shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class.
After the close of business on June 24, 2016, all outstanding Class B shares were converted to Class A shares. All current fiscal period dollar and share amounts for Class B presented in the Notes to Financial Statements are for the period March 1, 2016 through June 24, 2016.
In March 2017, the Board of Trustees approved a change in the name of Class T to Class M effective after the close of business on March 24, 2017.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds ,including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 28, 2017 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Fund represent a return of capital or capital gain. The Fund determines the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2017, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. The Fund is subject to a tax imposed on capital gains by certain countries in which it invests. An estimated deferred tax liability for net unrealized appreciation on the applicable securities is included in Other payables and accrued expenses on the Statement of Assets & Liabilities.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, deferred trustees compensation and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $700,011,718 |
| Gross unrealized depreciation | (43,745,466) |
| Net unrealized appreciation (depreciation) on securities | $656,266,252 |
| Tax Cost | $2,559,250,960 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $4,923,518 |
| Undistributed long-term capital gain | $39,433,331 |
| Net unrealized appreciation (depreciation) on securities and other investments | $656,219,557 |
The tax character of distributions paid was as follows:
| February 28, 2017 | February 29, 2016 | |
| Ordinary Income | $67,916,475 | $ 74,502,566 |
| Long-term Capital Gains | 58,550,261 | 170,400,035 |
| Total | $126,466,736 | $ 244,902,601 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital. In November 2016, the Board of Trustees approved the elimination of these redemption fees effective December 12, 2016.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securites and in-kind transactions, aggregated $1,728,107,751 and $1,942,329,048, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .25 % during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution Fee | Service Fee | Total Fees | Retained by FDC | |
| Class A | -% | .25% | $1,339,266 | $– |
| Class T | .25% | .25% | 436,934 | – |
| Class B | .75% | .25% | 18,669 | 14,002 |
| Class C | .75% | .25% | 3,060,705 | 786,573 |
| $4,855,574 | $800,575 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $454,705 |
| Class T | 51,077 |
| Class B(a) | 19 |
| Class C(a) | 51,246 |
| $557,047 |
(a) When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc., (FIIOC), an affiliate of the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $1,074,330 | .20 |
| Class T | 198,886 | .23 |
| Class B | 4,085 | .22 |
| Class C | 619,029 | .20 |
| Consumer Staples | 3,384,602 | .17 |
| Class I | 551,099 | .19 |
| $5,832,031 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $30,116 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense |
| Borrower | $7,265,050 | .74% | $2,995 |
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Redemptions In-Kind. During the period, 2,230,314 shares of the Fund held by an affiliated entity were redeemed in-kind for investments and cash with a value of $205,991,818. The net realized gain of $85,065,706 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 11: Share Transactions. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $9,764 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $1,515,619.
8. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average loan balance during the period for which loans were outstanding amounted to $2,290,333. The weighted average interest rate was 1.16%. The interest expense amounted to $443 under the bank borrowing program. At period end, there were no bank borrowings outstanding.
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $256,302 for the period.
Through arrangements with the Fund's custodian, credits realized as a result of certain uninvested cash balances were used to reduce the Fund's expense. During the period, these credits reduced the Fund's custody expense by $3,219.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $24,042.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| From net investment income | ||
| Class A | $7,577,410 | $5,892,374 |
| Class T | 1,043,893 | 832,225 |
| Class B | – | 21,356 |
| Class C | 2,453,649 | 1,681,417 |
| Consumer Staples | 28,450,076 | 30,907,531 |
| Class I | 4,802,129 | 3,093,118 |
| Total | $44,327,157 | $42,428,021 |
| From net realized gain | ||
| Class A | $14,585,099 | $29,492,766 |
| Class T | 2,440,856 | 5,430,950 |
| Class B | 38,559 | 809,700 |
| Class C | 8,724,413 | 16,753,262 |
| Consumer Staples | 48,589,839 | 136,504,977 |
| Class I | 7,760,813 | 13,482,925 |
| Total | $82,139,579 | $202,474,580 |
11. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
| Shares | Shares | Dollars | Dollars | |
| Year ended February 28, 2017 | Year ended February 29, 2016 | Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Class A | ||||
| Shares sold | 2,074,631 | 1,973,363 | $195,949,659 | $181,606,150 |
| Reinvestment of distributions | 237,892 | 372,764 | 21,465,950 | 34,290,264 |
| Shares redeemed | (2,123,267) | (1,195,463) | (197,828,865) | (110,798,612) |
| Net increase (decrease) | 189,256 | 1,150,664 | $19,586,744 | $105,097,802 |
| Class T | ||||
| Shares sold | 258,361 | 197,944 | $24,169,768 | $18,205,532 |
| Reinvestment of distributions | 37,389 | 66,110 | 3,349,216 | 6,055,600 |
| Shares redeemed | (212,844) | (214,470) | (19,792,973) | (19,884,944) |
| Net increase (decrease) | 82,906 | 49,584 | $7,726,011 | $4,376,188 |
| Class B | ||||
| Shares sold | 1,629 | 4,002 | $151,958 | $364,996 |
| Reinvestment of distributions | 379 | 8,400 | 35,399 | 777,774 |
| Shares redeemed | (78,913) | (93,279) | (7,397,851) | (8,496,255) |
| Net increase (decrease) | (76,905) | (80,877) | $(7,210,494) | $(7,353,485) |
| Class C | ||||
| Shares sold | 1,245,446 | 926,964 | $115,155,143 | $84,032,895 |
| Reinvestment of distributions | 115,157 | 181,545 | 10,152,865 | 16,369,686 |
| Shares redeemed | (931,585) | (551,638) | (84,513,838) | (49,873,026) |
| Net increase (decrease) | 429,018 | 556,871 | $40,794,170 | $50,529,555 |
| Consumer Staples | ||||
| Shares sold | 4,086,473 | 5,277,258 | $389,479,615 | $487,809,315 |
| Reinvestment of distributions | 801,941 | 1,736,133 | 73,103,322 | 161,200,153 |
| Shares redeemed | (10,263,589)(a) | (5,774,399) | (963,924,332)(a) | (543,103,364) |
| Net increase (decrease) | (5,375,175) | 1,238,992 | $(501,341,395) | $105,906,104 |
| Class I | ||||
| Shares sold | 2,282,645 | 1,318,941 | $217,344,361 | $121,982,188 |
| Reinvestment of distributions | 121,641 | 148,325 | 11,031,386 | 13,734,363 |
| Shares redeemed | (1,957,632) | (1,015,396) | (183,001,020) | (94,824,368) |
| Net increase (decrease) | 446,654 | 451,870 | $45,374,727 | $40,892,183 |
(a) Amount includes in-kind redemptions (see Note 5: Redemptions In-Kind)
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and Shareholders of Consumer Staples Portfolio:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Consumer Staples Portfolio (a fund of Fidelity Select Portfolios) as of February 28, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Consumer Staples Portfolio’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of February 28, 2017 by correspondence with the custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2017
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Each of the Trustees oversees 90 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the fund is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through SelectCo, its affiliates, and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
* Determined to be an "Interested Trustee" by virtue of, among other things, his or her affiliation with the trust or various entities under common control with SelectCo.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed the oil refining, drilling and marketing of petroleum products (including specialty petroleum products), recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present) and serves as its President and CEO. Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006. Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for the fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Trustee or Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006), and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue serves as a Member (2012-present) and Co-Chairman (2016-present) of the Board of Directors of United Way of New York, Member of the Board of Directors of NYC Leadership Academy (2012-present) and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services), Treasurer of United Way of New York (2012-2016), and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Carol B. Tomé (1957)
Year of Election or Appointment: 2017
Member of the Advisory Board
Ms. Tomé also serves as Trustee or Member of the Advisory Board of other Fidelity® funds. Ms. Tomé is Chief Financial Officer (2001-present) and Executive Vice President of Corporate Services (2007-present) of The Home Depot, Inc. (home improvement retailer) and a Director (2003-present) and Chair of the Audit Committee (2004-present) of United Parcel Service, Inc. (package delivery and supply chain management). Previously, Ms. Tomé served as Senior Vice President of Finance and Accounting/Treasurer (2000-2007) and Vice President and Treasurer (1995-2000) of The Home Depot, Inc. and Chair of the Board (2010-2012), Vice Chair of the Board (2009 and 2013), and a Director (2008-2013) of the Federal Reserve Bank of Atlanta. Ms. Tomé is also a director or trustee of many community and professional organizations.
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Interim Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (UK) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
Jeffrey S. Christian (1961)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Christian also serves as Assistant Treasurer of other funds. Mr. Christian is an employee of Fidelity Investments (2003-present).
William C. Coffey (1969)
Year of Election or Appointment: 2009
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Senior Vice President of Fidelity Management & Research Company (FMR) (investment adviser firm, 2016), Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of FMR (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
Colm A. Hogan (1973)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan is an employee of Fidelity Investments (2005-present). Mr. Colm A. Hogan is not related to Mr. Brian B. Hogan.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche (accounting firm, 2005-2013).
Renee Stagnone (1975)
Year of Election or Appointment: 2016
Assistant Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2016 to February 28, 2017).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio-A | Beginning Account Value September 1, 2016 | Ending Account Value February 28, 2017 | Expenses Paid During Period-B September 1, 2016 to February 28, 2017 | |
| Class A | 1.04% | |||
| Actual | $1,000.00 | $1,033.70 | $5.24 | |
| Hypothetical-C | $1,000.00 | $1,019.64 | $5.21 | |
| Class T | 1.32% | |||
| Actual | $1,000.00 | $1,032.40 | $6.65 | |
| Hypothetical-C | $1,000.00 | $1,018.25 | $6.61 | |
| Class C | 1.79% | |||
| Actual | $1,000.00 | $1,029.90 | $9.01 | |
| Hypothetical-C | $1,000.00 | $1,015.92 | $8.95 | |
| Consumer Staples | .76% | |||
| Actual | $1,000.00 | $1,035.20 | $3.84 | |
| Hypothetical-C | $1,000.00 | $1,021.03 | $3.81 | |
| Class I | .78% | |||
| Actual | $1,000.00 | $1,035.10 | $3.94 | |
| Hypothetical-C | $1,000.00 | $1,020.93 | $3.91 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of Consumer Staples Portfolio voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains | |
| Consumer Staples Portfolio | ||||
| Class A | 04/13/17 | 04/12/17 | $0.128 | $1.337 |
| Class M | 04/13/17 | 04/12/17 | $0.109 | $1.337 |
| Class C | 04/13/17 | 04/12/17 | $0.034 | $1.337 |
| Consumer Staples | 04/13/17 | 04/12/17 | $0.198 | $1.337 |
| Class I | 04/13/17 | 04/12/17 | $0.204 | $1.337 |
The fund hereby designates as a capital gain dividend with respect to the taxable year ended February 28, 2017, $94,968,443, or, if subsequently determined to be different, the net capital gain of such year.
Class A designates 100% and 83%; Class T designates 100% and 92%; Class C designates 100% and 100%; Consumer Staples designates 100% and 76%; and Class I designates 99% and 75%; of the dividends distributed in April and December, respectively during the fiscal year as qualifying for the dividends–received deduction for corporate shareholders.
Class A, Class T, Class C, Consumer Staples, and Class I designate 100% of each dividends distributed during the fiscal year as amounts which may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2018 of amounts for use in preparing 2017 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Consumer Staples Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for the fund. SelectCo and the sub-advisers are collectively referred to herein as the Investment Advisers. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of the fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2017 meeting, the Board unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with the fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as the fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for the fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of the fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that the fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of the Investment Advisers as it relates to the fund, including the backgrounds of investment personnel of SelectCo, and also considered the fund's investment objective, strategies, and related investment philosophy. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the investment personnel compensation program and whether this structure provides appropriate incentives to act in the best interests of the fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the Investment Advisers' investment staffs, including their size, education, experience, and resources, as well as Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board considered that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, compliance, and technology and operations capabilities and resources, which are integral parts of the investment management process.Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians, subcustodians, and pricing vendors; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs; (iv) broadening eligibility requirements for certain lower-priced share classes of, and streamlining the fee structure for, certain existing equity index funds; (v) lowering expense caps for certain existing funds and classes to reduce expenses paid by shareholders; (vi) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vii) rationalizing product lines and gaining increased efficiencies through fund mergers and share class consolidations; (viii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (ix) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; and (x) accelerating the conversion of all remaining Class B shares to Class A shares, which have a lower expense structure.Investment Performance. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.The Board took into account discussions with representatives of SelectCo about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for the fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. The fund underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2016, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address the fund's performance.In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing fund share classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors, including the following: general market conditions; issuer-specific information; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for the fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2016.Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should continue to benefit the shareholders of the fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than the fund. The fund's actual TMG %s and the number of funds in the Total Mapped Group are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee rate ranked, is also included in the chart and considered by the Board.Consumer Staples Portfolio
SELCS-ANN-0417
1.846042.110
Fidelity® Select Portfolios® Chemicals Portfolio Gold Portfolio Materials Portfolio Annual Report February 28, 2017 |
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Contents
Chemicals Portfolio | |
Gold Portfolio | |
Materials Portfolio | |
Board Approval of Investment Advisory Contracts and Management Fees |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2017 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Funds. This report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Funds nor Fidelity Distributors Corporation is a bank.
Chemicals Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Chemicals Portfolio | 38.02% | 13.40% | 12.51% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Chemicals Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $32,492 | Chemicals Portfolio | |
| $20,834 | S&P 500® Index | |
Chemicals Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Richard Malnight: For the fiscal year, the fund returned 38.02%, topping the 33.40% return of the MSCI U.S. IMI Chemicals 25/50 Index by a wide margin. The MSCI industry index outpaced the broader S&P 500®, as chemicals stocks and other more economically sensitive investments outperformed as global economic fears receded. An influx of chemicals firms pursuing mergers, acquisitions and other strategic alternatives also appealed to investors. Timely ownership of diversified chemicals firm Chemours helped for the full year, a reversal from six months ago. We added the position in September and were handsomely rewarded, as our stake returned 131% for the period. The diversified chemicals firm is a 2015 spinoff of industry giant DuPont, which was the fund’s second-largest holding this period. Repurchasing fertilizer producer CF Industries in November also aided relative results. The fund’s stake in Williams Partners, established in March 2016, also helped. The firm provides natural-gas storage and transportation, as well as services for separating natural-gas liquids that are key in ethylene production. Conversely, overweightings in W.R. Grace and PPG Industries hampered our relative result; Our positions gained just over 3% and 7% for the period, respectively. Both positions represent examples of higher-quality companies that underperformed in recent months due to challenges surrounding growth potential of established businesses in the current environment.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Chemicals Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| E.I. du Pont de Nemours & Co. | 17.8 | 13.2 |
| The Dow Chemical Co. | 12.3 | 12.7 |
| LyondellBasell Industries NV Class A | 11.1 | 6.1 |
| Monsanto Co. | 7.4 | 10.2 |
| Olin Corp. | 4.4 | 2.9 |
| Sherwin-Williams Co. | 4.4 | 2.8 |
| CF Industries Holdings, Inc. | 4.0 | 0.0 |
| The Chemours Co. LLC | 3.7 | 0.0 |
| Celanese Corp. Class A | 3.5 | 0.0 |
| Univar, Inc. | 3.2 | 0.0 |
| 71.8 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Chemicals | 95.3% | |
| Trading Companies & Distributors | 3.2% | |
| All Others* | 1.5% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Chemicals | 86.2% | |
| Oil, Gas & Consumable Fuels | 5.0% | |
| Trading Companies & Distributors | 0.8% | |
| Energy Equipment & Services | 0.4% | |
| Machinery | 0.2% | |
| All Others* | 7.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Chemicals Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 98.5% | |||
| Shares | Value | ||
| Chemicals - 95.3% | |||
| Commodity Chemicals - 20.3% | |||
| LyondellBasell Industries NV Class A | 1,977,722 | $180,447,355 | |
| Olin Corp. | 2,319,211 | 72,081,078 | |
| Orion Engineered Carbons SA | 564,800 | 11,747,840 | |
| Trinseo SA | 668,450 | 46,223,318 | |
| Tronox Ltd. Class A | 542,200 | 9,396,326 | |
| Westlake Chemical Corp. | 161,446 | 10,240,520 | |
| 330,136,437 | |||
| Diversified Chemicals - 38.7% | |||
| Ashland Global Holdings, Inc. | 206,206 | 24,880,816 | |
| E.I. du Pont de Nemours & Co. | 3,678,129 | 288,880,251 | |
| Eastman Chemical Co. | 475,057 | 38,123,324 | |
| Huntsman Corp. | 717,100 | 16,206,460 | |
| LSB Industries, Inc. (a)(b) | 6,993 | 76,014 | |
| The Chemours Co. LLC | 1,805,000 | 60,756,300 | |
| The Dow Chemical Co. | 3,211,794 | 199,966,294 | |
| 628,889,459 | |||
| Fertilizers & Agricultural Chemicals - 12.6% | |||
| AgroFresh Solutions, Inc. (a)(b) | 537,038 | 1,455,373 | |
| CF Industries Holdings, Inc. | 2,051,100 | 64,445,562 | |
| CVR Partners LP | 1,058,200 | 5,492,058 | |
| Monsanto Co. | 1,052,059 | 119,755,876 | |
| The Scotts Miracle-Gro Co. Class A | 152,512 | 13,822,163 | |
| 204,971,032 | |||
| Industrial Gases - 3.0% | |||
| Air Products & Chemicals, Inc. | 350,208 | 49,193,718 | |
| Specialty Chemicals - 20.7% | |||
| Axalta Coating Systems (a) | 363,500 | 10,581,485 | |
| Celanese Corp. Class A | 647,600 | 57,746,492 | |
| Ecolab, Inc. | 389,430 | 48,277,637 | |
| Kraton Performance Polymers, Inc. (a) | 884,071 | 24,073,253 | |
| Platform Specialty Products Corp. (a)(b) | 3,503,637 | 46,212,972 | |
| PPG Industries, Inc. | 463,900 | 47,517,277 | |
| Sherwin-Williams Co. | 232,753 | 71,813,611 | |
| W.R. Grace & Co. | 434,300 | 30,765,812 | |
| 336,988,539 | |||
| TOTAL CHEMICALS | 1,550,179,185 | ||
| Trading Companies & Distributors - 3.2% | |||
| Trading Companies & Distributors - 3.2% | |||
| Univar, Inc. (a) | 1,599,280 | 51,496,816 | |
| TOTAL COMMON STOCKS | |||
| (Cost $1,171,744,666) | 1,601,676,001 | ||
| Money Market Funds - 2.4% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 35,793,823 | 35,800,982 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 3,124,546 | 3,125,171 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $38,924,860) | 38,926,153 | ||
| TOTAL INVESTMENT PORTFOLIO - 100.9% | |||
| (Cost $1,210,669,526) | 1,640,602,154 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.9)% | (13,959,884) | ||
| NET ASSETS - 100% | $1,626,642,270 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $226,280 |
| Fidelity Securities Lending Cash Central Fund | 38,016 |
| Total | $264,296 |
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 84.7% |
| Netherlands | 11.1% |
| Luxembourg | 3.6% |
| Others (Individually Less Than 1%) | 0.6% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Chemicals Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $2,941,681) — See accompanying schedule: Unaffiliated issuers (cost $1,171,744,666) | $1,601,676,001 | |
| Fidelity Central Funds (cost $38,924,860) | 38,926,153 | |
| Total Investments (cost $1,210,669,526) | $1,640,602,154 | |
| Receivable for investments sold | 28,704,561 | |
| Receivable for fund shares sold | 4,864,231 | |
| Dividends receivable | 2,849,246 | |
| Distributions receivable from Fidelity Central Funds | 11,396 | |
| Prepaid expenses | 4,696 | |
| Other receivables | 77,744 | |
| Total assets | 1,677,114,028 | |
| Liabilities | ||
| Payable to custodian bank | $891 | |
| Payable for investments purchased | 42,850,798 | |
| Payable for fund shares redeemed | 3,393,964 | |
| Accrued management fee | 721,951 | |
| Other affiliated payables | 280,123 | |
| Other payables and accrued expenses | 97,831 | |
| Collateral on securities loaned | 3,126,200 | |
| Total liabilities | 50,471,758 | |
| Net Assets | $1,626,642,270 | |
| Net Assets consist of: | ||
| Paid in capital | $1,135,944,850 | |
| Undistributed net investment income | 761,893 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 60,002,899 | |
| Net unrealized appreciation (depreciation) on investments | 429,932,628 | |
| Net Assets, for 10,015,880 shares outstanding | $1,626,642,270 | |
| Net Asset Value, offering price and redemption price per share ($1,626,642,270 ÷ 10,015,880 shares) | $162.41 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $26,332,246 | |
| Interest | 645,026 | |
| Income from Fidelity Central Funds | 264,296 | |
| Total income | 27,241,568 | |
| Expenses | ||
| Management fee | $7,294,748 | |
| Transfer agent fees | 2,653,399 | |
| Accounting and security lending fees | 424,508 | |
| Custodian fees and expenses | 25,908 | |
| Independent trustees' fees and expenses | 28,417 | |
| Registration fees | 69,314 | |
| Audit | 47,682 | |
| Legal | 17,091 | |
| Miscellaneous | 16,911 | |
| Total expenses before reductions | 10,577,978 | |
| Expense reductions | (105,775) | 10,472,203 |
| Net investment income (loss) | 16,769,365 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 137,894,554 | |
| Fidelity Central Funds | 12,611 | |
| Foreign currency transactions | 57,910 | |
| Total net realized gain (loss) | 137,965,075 | |
| Change in net unrealized appreciation (depreciation) on investment securities | 267,026,378 | |
| Net gain (loss) | 404,991,453 | |
| Net increase (decrease) in net assets resulting from operations | $421,760,818 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $16,769,365 | $17,291,431 |
| Net realized gain (loss) | 137,965,075 | 19,690,989 |
| Change in net unrealized appreciation (depreciation) | 267,026,378 | (244,358,951) |
| Net increase (decrease) in net assets resulting from operations | 421,760,818 | (207,376,531) |
| Distributions to shareholders from net investment income | (15,876,012) | (16,089,555) |
| Distributions to shareholders from net realized gain | (50,330,730) | (64,340,740) |
| Total distributions | (66,206,742) | (80,430,295) |
| Share transactions | ||
| Proceeds from sales of shares | 556,232,815 | 213,978,441 |
| Reinvestment of distributions | 63,676,065 | 77,248,254 |
| Cost of shares redeemed | (395,662,133) | (581,672,952) |
| Net increase (decrease) in net assets resulting from share transactions | 224,246,747 | (290,446,257) |
| Redemption fees | 14,379 | 12,995 |
| Total increase (decrease) in net assets | 579,815,202 | (578,240,088) |
| Net Assets | ||
| Beginning of period | 1,046,827,068 | 1,625,067,156 |
| End of period | $1,626,642,270 | $1,046,827,068 |
| Other Information | ||
| Undistributed net investment income end of period | $761,893 | $– |
| Distributions in excess of net investment income end of period | $– | $(34,341) |
| Shares | ||
| Sold | 3,811,949 | 1,536,095 |
| Issued in reinvestment of distributions | 426,812 | 567,690 |
| Redeemed | (2,719,518) | (4,204,688) |
| Net increase (decrease) | 1,519,243 | (2,100,903) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Chemicals Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $123.20 | $153.34 | $148.23 | $122.98 | $110.52 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.82 | 1.87 | 1.64 | 1.23 | 1.84C |
| Net realized and unrealized gain (loss) | 44.40 | (23.41) | 9.09 | 32.11 | 15.10 |
| Total from investment operations | 46.22 | (21.54) | 10.73 | 33.34 | 16.94 |
| Distributions from net investment income | (1.68) | (1.81) | (1.42) | (1.18) | (1.55) |
| Distributions from net realized gain | (5.33) | (6.80) | (4.20) | (6.92) | (2.95) |
| Total distributions | (7.01) | (8.60)D | (5.62) | (8.10) | (4.49)E |
| Redemption fees added to paid in capitalB | –F | –F | –F | .01 | .01 |
| Net asset value, end of period | $162.41 | $123.20 | $153.34 | $148.23 | $122.98 |
| Total ReturnG | 38.02% | (14.46)% | 7.52% | 27.77% | 15.61% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .80% | .80% | .79% | .81% | .83% |
| Expenses net of fee waivers, if any | .80% | .80% | .79% | .81% | .83% |
| Expenses net of all reductions | .79% | .79% | .79% | .80% | .81% |
| Net investment income (loss) | 1.26% | 1.36% | 1.10% | .91% | 1.62%C |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,626,642 | $1,046,827 | $1,625,067 | $1,429,434 | $1,134,777 |
| Portfolio turnover rateJ | 85% | 79% | 80%K | 109% | 60% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.30 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.35%.
D Total distributions of $8.60 per share is comprised of distributions from net investment income of $1.806 and distributions from net realized gain of $6.795 per share.
E Total distributions of $4.49 per share is comprised of distributions from net investment income of $1.547 and distributions from net realized gain of $2.947 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2017
1. Organization.
Chemicals Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. Share transactions on the Statement of Changes in Net Assets may contain exchanges between affiliated funds. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Fund represent a return of capital or capital gain. The Fund determines the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2017, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, partnerships, deferred trustees compensation and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $435,761,054 |
| Gross unrealized depreciation | (8,930,791) |
| Net unrealized appreciation (depreciation) on securities | $426,830,263 |
| Tax Cost | $1,213,771,891 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $30,160,166 |
| Undistributed long-term capital gain | $33,767,332 |
| Net unrealized appreciation (depreciation) on securities and other investments | $426,830,263 |
The tax character of distributions paid was as follows:
| February 28, 2017 | February 29, 2016 | |
| Ordinary Income | $40,880,727 | $ 16,089,555 |
| Long-term Capital Gains | 25,326,015 | 64,340,740 |
| Total | $66,206,742 | $ 80,430,295 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital. In November 2016, the Board of Trustees approved the elimination of these redemption fees effective December 12, 2016.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $1,356,943,203 and $1,075,457,085, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Fund's transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .20% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $53,011 for the period.
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $3,828 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $38,016.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $93,739 for the period. In addition, through arrangements with the Fund's custodian, credits realized as a result of certain uninvested cash balances were used to reduce the Fund's expenses. During the period, these credits reduced the Fund's custody expenses by $563.
In addition, during the period the investment adviser reimbursed and/or waived a portion of operating expenses in the amount of $11,473.
9. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Gold Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Gold Portfolio | 20.38% | (13.85)% | (2.20)% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Gold Portfolio, a class of the fund, on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $8,002 | Gold Portfolio | |
| $20,834 | S&P 500® Index | |
Gold Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager S. Joseph Wickwire II, CFA: For the year, most of the fund's share classes (excluding sales charges, if applicable) rose roughly 20%, underperforming the 21.88% return of the S&P® Global BMI Gold Capped Index, and falling short of the broad-based S&P 500®. It was a volatile year for gold and gold stocks. Both rallied in the first half of the fiscal year against a global backdrop of below-average economic growth, negative real interest rates, currency debasement and increasing political tension. After August, gold markets reversed course, falling steeply after Trump's election on expectations of a stronger dollar and higher interest rates. The asset class hit bottom in late December, and appearing oversold, then rebounded a bit through the end of February 2017. The commodity price finished flat for the year, however. Versus the S&P industry benchmark, the fund's biggest detractor by far was its non-index stake in bullion, with a 9% weighting, on average. I've tactically used gold and silver bullion for price exposure and liquidity reasons, but in the period's second half, gold-related equities gained favor among investors, hurting our bullion position. Among individual stocks, detractors included names we overweighted that underperformed, including Detour Gold and New Gold. These firms stuggled with operational execution. Another contributor, Premier Gold Mines, executed well but failed to attract investment interest, which caused it to underperform. Conversely, the fund was helped by overweighting names that significantly outperformed, such as B2Gold, the fund's biggest relative contributor by far. B2 executed well, made significant progress in key projects, and did not need to raise capital as the market anticipated. The stock returned 175% for the fund this year. Other contributors included Continental Gold and Torex Gold. All three stayed focused on their project pipelines and benefited from an improved gold environment in the period's first half.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On April 1, 2017, the fund’s industry benchmark will change from the S&P® Global BMI Gold Capped Index (a custom index developed for Fidelity) to S&P® Global BMI Gold Capped 20/45 Index (a public benchmark that became available more recently). Due to new international benchmark guidelines, S&P® Dow Jones® Indices has decided to stop offering its brand on custom benchmarks, effective March 31, 2017. Fidelity believes that the new S&P® index will continue to provide shareholders with meaningful performance comparisons.Gold Portfolio
Consolidated Investment Summary (Unaudited)
The information in the following tables is based on the consolidated investments of the Fund.Top Ten Holdings as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Randgold Resources Ltd. sponsored ADR | 8.2 | 6.5 |
| Barrick Gold Corp. | 7.6 | 5.8 |
| Newmont Mining Corp. | 6.9 | 7.6 |
| Agnico Eagle Mines Ltd. (Canada) | 6.0 | 6.4 |
| B2Gold Corp. | 5.7 | 3.8 |
| Franco-Nevada Corp. | 5.3 | 5.3 |
| Newcrest Mining Ltd. | 4.5 | 5.4 |
| Silver Bullion | 4.0 | 4.8 |
| Goldcorp, Inc. | 3.8 | 3.2 |
| Torex Gold Resources, Inc. | 3.3 | 3.0 |
| 55.3 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Gold | 90.5% | |
| Commodities & Related Investments* | 5.7% | |
| Precious Metals & Minerals | 1.0% | |
| Silver | 1.0% | |
| Diversified Metals & Mining | 0.8% | |
| Copper | 0.3% | |
| All Others** | 0.7% | |
* Includes gold bullion and/or silver bullion.
** Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Gold | 87.8% | |
| Commodities & Related Investments* | 9.4% | |
| Precious Metals & Minerals | 1.2% | |
| Silver | 1.2% | |
| Diversified Metals & Mining | 0.4% | |
* Includes gold bullion and/or silver bullion.
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Geographic Diversification (% of fund's net assets)
| As of February 28, 2017 | ||
| Canada | 59.8% | |
| United States of America* | 16.3% | |
| Bailiwick of Jersey | 8.3% | |
| Australia | 6.2% | |
| South Africa | 4.8% | |
| United Kingdom | 2.1% | |
| Cayman Islands | 1.2% | |
| Peru | 1.0% | |
| China | 0.3% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.
| As of August 31, 2016 | ||
| Canada | 55.7% | |
| United States of America* | 20.0% | |
| Australia | 7.7% | |
| Bailiwick of Jersey | 6.5% | |
| South Africa | 5.9% | |
| United Kingdom | 1.4% | |
| Peru | 1.0% | |
| Cayman Islands | 0.8% | |
| China | 0.6% | |
| Other | 0.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Percentages are based on country or territory of incorporation and are adjusted for the effect of futures contracts, if applicable.
Gold Portfolio
Consolidated Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 93.6% | |||
| Shares | Value | ||
| Australia - 6.2% | |||
| Metals & Mining - 6.2% | |||
| Gold - 6.2% | |||
| Evolution Mining Ltd. | 2,641,243 | $4,374,089 | |
| Gold Road Resources Ltd. (a) | 1,080,000 | 438,859 | |
| Newcrest Mining Ltd. | 4,118,268 | 69,906,520 | |
| Northern Star Resources Ltd. | 1,278,118 | 4,105,920 | |
| Perseus Mining Ltd.: | |||
| (Australia) (a) | 1,717,134 | 408,123 | |
| (Canada) (a) | 1,300,000 | 313,206 | |
| Resolute Mng Ltd. | 3,125,161 | 3,857,658 | |
| Saracen Mineral Holdings Ltd. (a) | 8,122,787 | 6,788,237 | |
| Silver Lake Resources Ltd. (a) | 3,205,985 | 1,634,589 | |
| St Barbara Ltd. (a) | 1,847,257 | 3,597,382 | |
| 95,424,583 | |||
| Bailiwick of Jersey - 8.3% | |||
| Metals & Mining - 8.3% | |||
| Diversified Metals & Mining - 0.1% | |||
| Glencore Xstrata PLC (a) | 416,400 | 1,664,000 | |
| Gold - 8.2% | |||
| Randgold Resources Ltd. sponsored ADR | 1,371,295 | 125,761,466 | |
| TOTAL METALS & MINING | 127,425,466 | ||
| Canada - 59.8% | |||
| Metals & Mining - 59.8% | |||
| Copper - 0.3% | |||
| First Quantum Minerals Ltd. | 382,700 | 3,982,016 | |
| Diversified Metals & Mining - 0.4% | |||
| Arizona Mining, Inc. (a)(b) | 622,900 | 1,313,146 | |
| Ivanhoe Mines Ltd. (a) | 1,708,400 | 4,952,070 | |
| 6,265,216 | |||
| Gold - 57.5% | |||
| Agnico Eagle Mines Ltd. (Canada) | 2,188,601 | 92,029,337 | |
| Alacer Gold Corp. (a) | 1,623,663 | 3,105,032 | |
| Alamos Gold, Inc. | 2,655,487 | 19,213,394 | |
| Argonaut Gold, Inc. (a) | 6,308,462 | 9,879,236 | |
| B2Gold Corp. (a) | 28,385,793 | 87,196,232 | |
| Barrick Gold Corp. | 6,357,669 | 117,321,538 | |
| Belo Sun Mining Corp. (a) | 59,800 | 43,222 | |
| Centerra Gold, Inc. | 647,000 | 3,122,474 | |
| Continental Gold, Inc. (a)(c) | 7,770,400 | 26,033,941 | |
| Detour Gold Corp. (a) | 2,636,900 | 32,876,874 | |
| Detour Gold Corp. (a)(d) | 785,900 | 9,798,603 | |
| Eldorado Gold Corp. | 9,290,935 | 28,400,238 | |
| Franco-Nevada Corp. | 1,256,100 | 80,962,747 | |
| Goldcorp, Inc. | 3,675,700 | 58,254,393 | |
| Guyana Goldfields, Inc. (a) | 4,378,400 | 22,317,247 | |
| Guyana Goldfields, Inc. (a)(d) | 155,000 | 790,054 | |
| Integra Gold Corp. (a) | 1,664,500 | 952,432 | |
| Kinross Gold Corp. (a) | 2,825,391 | 9,955,451 | |
| Kirkland Lake Gold Ltd. (a) | 1,131,919 | 8,096,093 | |
| Klondex Mines Ltd. (a) | 603,600 | 3,203,870 | |
| Lundin Gold, Inc. (a) | 1,000 | 4,111 | |
| New Gold, Inc. (a) | 10,245,675 | 29,544,448 | |
| Novagold Resources, Inc. (a) | 1,747,700 | 9,237,204 | |
| OceanaGold Corp. | 9,921,932 | 28,162,689 | |
| Osisko Gold Royalties Ltd. | 1,105,993 | 12,124,121 | |
| Pilot Gold, Inc. (a) | 1,418,150 | 565,893 | |
| Premier Gold Mines Ltd. (a)(c) | 15,325,622 | 29,885,078 | |
| Pretium Resources, Inc. (a) | 1,652,083 | 16,754,674 | |
| Pretium Resources, Inc. (a)(d) | 225,000 | 2,281,848 | |
| Primero Mining Corp. (a) | 1,812,100 | 1,159,679 | |
| Richmont Mines, Inc. (a) | 702,843 | 5,482,197 | |
| Rubicon Minerals Corp. (a) | 1,000 | 1,506 | |
| Sandstorm Gold Ltd. (a) | 1,506,475 | 6,317,622 | |
| Seabridge Gold, Inc. (a) | 1,405,890 | 14,340,078 | |
| SEMAFO, Inc. (a) | 6,750,700 | 20,686,153 | |
| Silver Standard Resources, Inc. (a) | 581,200 | 6,441,247 | |
| Tahoe Resources, Inc. | 2,985,938 | 25,313,704 | |
| Teranga Gold Corp. (a) | 1,230,000 | 805,677 | |
| Teranga Gold Corp. CDI unit (a) | 3,338,072 | 2,252,184 | |
| Timmins Gold Corp. (a) | 371,500 | 142,648 | |
| Torex Gold Resources, Inc. (a) | 2,646,400 | 51,206,505 | |
| Yamana Gold, Inc. | 3,225,620 | 8,912,833 | |
| 885,174,507 | |||
| Precious Metals & Minerals - 0.6% | |||
| Dalradian Resources, Inc. (a) | 415,700 | 384,965 | |
| Gold Standard Ventures Corp. (a) | 2,724,500 | 7,076,890 | |
| Osisko Mining, Inc. (a)(b) | 778,900 | 2,134,615 | |
| 9,596,470 | |||
| Silver - 1.0% | |||
| MAG Silver Corp. (a) | 352,600 | 5,070,516 | |
| Silver Wheaton Corp. | 556,600 | 10,841,170 | |
| 15,911,686 | |||
| TOTAL METALS & MINING | 920,929,895 | ||
| Cayman Islands - 1.2% | |||
| Metals & Mining - 1.2% | |||
| Gold - 1.2% | |||
| Endeavour Mining Corp. (a) | 997,240 | 18,612,844 | |
| China - 0.3% | |||
| Metals & Mining - 0.3% | |||
| Gold - 0.3% | |||
| Zijin Mng Group Co. Ltd. (H Shares) | 11,240,000 | 4,242,384 | |
| Mexico - 0.0% | |||
| Metals & Mining - 0.0% | |||
| Precious Metals & Minerals - 0.0% | |||
| Industrias Penoles SA de CV | 8,518 | 202,365 | |
| Peru - 1.0% | |||
| Metals & Mining - 1.0% | |||
| Gold - 1.0% | |||
| Compania de Minas Buenaventura SA sponsored ADR | 1,313,928 | 16,161,314 | |
| South Africa - 4.8% | |||
| Metals & Mining - 4.8% | |||
| Gold - 4.8% | |||
| AngloGold Ashanti Ltd. sponsored ADR (a) | 3,651,408 | 40,238,516 | |
| DRDGOLD Ltd. sponsored ADR | 1,000 | 5,230 | |
| Gold Fields Ltd. sponsored ADR | 4,729,426 | 14,613,926 | |
| Harmony Gold Mining Co. Ltd. | 1,484,000 | 3,598,689 | |
| Harmony Gold Mining Co. Ltd. sponsored ADR | 1,585,400 | 3,963,500 | |
| Sibanye Gold Ltd. ADR | 1,325,306 | 10,748,232 | |
| 73,168,093 | |||
| United Kingdom - 2.1% | |||
| Metals & Mining - 2.1% | |||
| Diversified Metals & Mining - 0.3% | |||
| Rio Tinto PLC | 101,900 | 4,176,493 | |
| Gold - 1.4% | |||
| Acacia Mining PLC | 3,331,536 | 22,157,899 | |
| Pan African Resources PLC | 230,000 | 47,090 | |
| 22,204,989 | |||
| Precious Metals & Minerals - 0.4% | |||
| Fresnillo PLC | 363,000 | 6,693,368 | |
| TOTAL METALS & MINING | 33,074,850 | ||
| United States of America - 9.9% | |||
| Metals & Mining - 9.9% | |||
| Gold - 9.9% | |||
| McEwen Mining, Inc. | 939,010 | 3,220,804 | |
| Newmont Mining Corp. | 3,080,200 | 105,466,048 | |
| Royal Gold, Inc. | 660,413 | 43,620,279 | |
| 152,307,131 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $1,369,430,408) | 1,441,548,925 | ||
| Troy Ounces | |||
| Commodities - 5.7% | |||
| Gold Bullion (a) | 21,510 | 26,915,033 | |
| Silver Bullion (a) | 3,322,000 | 60,923,819 | |
| TOTAL COMMODITIES | |||
| (Cost $80,077,110) | 87,838,852 | ||
| Shares | Value | ||
| Money Market Funds - 1.1% | |||
| Fidelity Cash Central Fund, 0.60% (e) | 15,759,747 | 15,762,899 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (e)(f) | 1,081,568 | 1,081,785 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $16,844,672) | 16,844,684 | ||
| TOTAL INVESTMENT PORTFOLIO - 100.4% | |||
| (Cost $1,466,352,190) | 1,546,232,461 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.4)% | (6,128,124) | ||
| NET ASSETS - 100% | $1,540,104,337 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated company
(d) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $12,870,505 or 0.8% of net assets.
(e) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(f) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $69,522 |
| Fidelity Securities Lending Cash Central Fund | 10,665 |
| Total | $80,187 |
Consolidated Subsidiary
| Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, end of period |
| Fidelity Select Cayman Gold Ltd. | $185,320,085 | $92,173,835 | $200,298,268 | $-- | $87,787,763 |
Other Affiliated Issuers
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:
| Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, end of period |
| Continental Gold, Inc. | $7,779,166 | $2,177,205 | $742,920 | $-- | $26,033,941 |
| Premier Gold Mines Ltd. | 25,711,502 | 11,220,829 | -- | -- | 29,885,078 |
| Total | $33,490,668 | $13,398,034 | $742,920 | $-- | $55,919,019 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Consolidated Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $1,441,548,925 | $1,433,773,743 | $7,775,182 | $-- |
| Commodities | 87,838,852 | 87,838,852 | -- | -- |
| Money Market Funds | 16,844,684 | 16,844,684 | -- | -- |
| Total Investments in Securities: | $1,546,232,461 | $1,538,457,279 | $7,775,182 | $-- |
The following is a summary of transfers between Level 1 and Level 2 for the period ended February 28, 2017. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Consolidated Financial Statements:
| Transfers | Total |
| Level 1 to Level 2 | $0 |
| Level 2 to Level 1 | $72,999,912 |
See accompanying notes which are an integral part of the consolidated financial statements.
Gold Portfolio
Consolidated Financial Statements
Consolidated Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $1,186,039) — See accompanying schedule: Unaffiliated issuers (cost $1,300,354,005) | $1,385,629,906 | |
| Fidelity Central Funds (cost $16,844,672) | 16,844,684 | |
| Commodities (cost $80,077,110) | 87,838,852 | |
| Other affiliated issuers (cost $69,076,403) | 55,919,019 | |
| Total Investments (cost $1,466,352,190) | $1,546,232,461 | |
| Cash | 8,950 | |
| Foreign currency held at value (cost $114,029) | 114,029 | |
| Receivable for fund shares sold | 3,691,431 | |
| Dividends receivable | 505,820 | |
| Distributions receivable from Fidelity Central Funds | 15,268 | |
| Prepaid expenses | 7,881 | |
| Other receivables | 77,802 | |
| Total assets | 1,550,653,642 | |
| Liabilities | ||
| Payable for investments purchased | $677,067 | |
| Payable for fund shares redeemed | 7,396,301 | |
| Accrued management fee | 758,073 | |
| Distribution and service plan fees payable | 120,136 | |
| Other affiliated payables | 341,617 | |
| Other payables and accrued expenses | 174,338 | |
| Collateral on securities loaned | 1,081,773 | |
| Total liabilities | 10,549,305 | |
| Net Assets | $1,540,104,337 | |
| Net Assets consist of: | ||
| Paid in capital | $2,818,682,698 | |
| Accumulated net investment loss | (49,672) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,358,407,528) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 79,878,839 | |
| Net Assets | $1,540,104,337 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($83,588,637 ÷ 4,069,614 shares) | $20.54 | |
| Maximum offering price per share (100/94.25 of $20.54) | $21.79 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($25,169,746 ÷ 1,246,366 shares) | $20.19 | |
| Maximum offering price per share (100/96.50 of $20.19) | $20.92 | |
| Class C: | ||
| Net Asset Value and offering price per share ($101,214,813 ÷ 5,228,706 shares)(a) | $19.36 | |
| Gold: | ||
| Net Asset Value, offering price and redemption price per share ($1,271,457,815 ÷ 60,489,023 shares) | $21.02 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($58,673,326 ÷ 2,791,934 shares) | $21.02 |
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $8,352,091 | |
| Income from Fidelity Central Funds | 80,187 | |
| Income before foreign taxes withheld | 8,432,278 | |
| Less foreign taxes withheld | (800,026) | |
| Total income | 7,632,252 | |
| Expenses | ||
| Management fee | $9,811,701 | |
| Transfer agent fees | 3,642,106 | |
| Distribution and service plan fees | 1,289,371 | |
| Accounting and security lending fees | 760,040 | |
| Custodian fees and expenses | 331,897 | |
| Independent trustees' fees and expenses | 36,346 | |
| Registration fees | 211,660 | |
| Audit | 71,567 | |
| Legal | 20,581 | |
| Interest | 3,044 | |
| Miscellaneous | 19,888 | |
| Total expenses before reductions | 16,198,201 | |
| Expense reductions | (515,991) | 15,682,210 |
| Net investment income (loss) | (8,049,958) | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investments: | ||
| Unaffiliated issuers | (50,651,285) | |
| Fidelity Central Funds | 1,349 | |
| Other affiliated issuers | (1,353,943) | |
| Commodities | (4,656,219) | |
| Foreign currency transactions | 101,165 | |
| Total net realized gain (loss) | (56,558,933) | |
| Change in net unrealized appreciation (depreciation) on: Investments | 264,003,740 | |
| Assets and liabilities in foreign currencies | 16,260 | |
| Commodities | 18,412,875 | |
| Total change in net unrealized appreciation (depreciation) | 282,432,875 | |
| Net gain (loss) | 225,873,942 | |
| Net increase (decrease) in net assets resulting from operations | $217,823,984 |
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $(8,049,958) | $(2,113,041) |
| Net realized gain (loss) | (56,558,933) | (161,201,963) |
| Change in net unrealized appreciation (depreciation) | 282,432,875 | 158,387,878 |
| Net increase (decrease) in net assets resulting from operations | 217,823,984 | (4,927,126) |
| Distributions to shareholders from net realized gain | (47,051,891) | – |
| Share transactions - net increase (decrease) | 114,767,885 | 137,310,705 |
| Redemption fees | 402,160 | 180,108 |
| Total increase (decrease) in net assets | 285,942,138 | 132,563,687 |
| Net Assets | ||
| Beginning of period | 1,254,162,199 | 1,121,598,512 |
| End of period | $1,540,104,337 | $1,254,162,199 |
| Other Information | ||
| Accumulated net investment loss end of period | $(49,672) | $(13,704) |
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Financial Highlights — Gold Portfolio Class A
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $17.70 | $18.11 | $22.01 | $30.25 | $45.37 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.16) | (.06) | (.10) | –C | .07 |
| Net realized and unrealized gain (loss) | 3.59 | (.35) | (3.80) | (8.25) | (15.19) |
| Total from investment operations | 3.43 | (.41) | (3.90) | (8.25) | (15.12) |
| Distributions from net realized gain | (.60) | – | – | – | – |
| Total distributions | (.60) | – | – | – | – |
| Redemption fees added to paid in capitalB | .01 | –C | –C | .01 | –C |
| Net asset value, end of period | $20.54 | $17.70 | $18.11 | $22.01 | $30.25 |
| Total ReturnD,E | 19.97% | (2.26)% | (17.72)% | (27.24)% | (33.33)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.19% | 1.23% | 1.23% | 1.21% | 1.18% |
| Expenses net of fee waivers, if any | 1.16% | 1.20% | 1.19% | 1.19% | 1.17% |
| Expenses net of all reductions | 1.16% | 1.20% | 1.19% | 1.18% | 1.17% |
| Net investment income (loss) | (.71)% | (.44)% | (.51)% | - %H | .18% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $83,589 | $53,509 | $46,898 | $60,270 | $101,202 |
| Portfolio turnover rateI | 28% | 20% | 20% | 56% | 18% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Total returns do not include the effect of the sales charges.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount represents less than .005%.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Financial Highlights — Gold Portfolio Class T
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $17.37 | $17.83 | $21.73 | $29.95 | $45.04 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.22) | (.11) | (.15) | (.06) | (.03) |
| Net realized and unrealized gain (loss) | 3.54 | (.35) | (3.75) | (8.17) | (15.06) |
| Total from investment operations | 3.32 | (.46) | (3.90) | (8.23) | (15.09) |
| Distributions from net realized gain | (.51) | – | – | – | – |
| Total distributions | (.51) | – | – | – | – |
| Redemption fees added to paid in capitalB | .01 | –C | –C | .01 | –C |
| Net asset value, end of period | $20.19 | $17.37 | $17.83 | $21.73 | $29.95 |
| Total ReturnD,E | 19.62% | (2.58)% | (17.95)% | (27.45)% | (33.50)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.49% | 1.52% | 1.50% | 1.49% | 1.45% |
| Expenses net of fee waivers, if any | 1.46% | 1.48% | 1.46% | 1.47% | 1.44% |
| Expenses net of all reductions | 1.46% | 1.48% | 1.46% | 1.46% | 1.44% |
| Net investment income (loss) | (1.01)% | (.72)% | (.79)% | (.28)% | (.09)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $25,170 | $17,720 | $16,200 | $18,402 | $24,913 |
| Portfolio turnover rateH | 28% | 20% | 20% | 56% | 18% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Total returns do not include the effect of the sales charges.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Financial Highlights — Gold Portfolio Class C
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $16.68 | $17.20 | $21.06 | $29.15 | $44.05 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.29) | (.16) | (.23) | (.16) | (.20) |
| Net realized and unrealized gain (loss) | 3.42 | (.36) | (3.63) | (7.94) | (14.70) |
| Total from investment operations | 3.13 | (.52) | (3.86) | (8.10) | (14.90) |
| Distributions from net realized gain | (.45) | – | – | – | – |
| Total distributions | (.45) | – | – | – | – |
| Redemption fees added to paid in capitalB | –C | –C | –C | .01 | –C |
| Net asset value, end of period | $19.36 | $16.68 | $17.20 | $21.06 | $29.15 |
| Total ReturnD,E | 19.19% | (3.02)% | (18.33)% | (27.75)% | (33.83)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.88% | 1.97% | 1.96% | 1.96% | 1.93% |
| Expenses net of fee waivers, if any | 1.85% | 1.93% | 1.92% | 1.94% | 1.92% |
| Expenses net of all reductions | 1.84% | 1.93% | 1.92% | 1.93% | 1.91% |
| Net investment income (loss) | (1.40)% | (1.17)% | (1.25)% | (.76)% | (.57)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $101,215 | $52,732 | $39,429 | $33,811 | $37,787 |
| Portfolio turnover rateH | 28% | 20% | 20% | 56% | 18% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Total returns do not include the effect of the contingent deferred sales charge.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Financial Highlights — Gold Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $18.12 | $18.50 | $22.41 | $30.72 | $45.96 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.09) | (.03) | (.04) | .06 | .16 |
| Net realized and unrealized gain (loss) | 3.66 | (.35) | (3.87) | (8.38) | (15.40) |
| Total from investment operations | 3.57 | (.38) | (3.91) | (8.32) | (15.24) |
| Distributions from net realized gain | (.68) | – | – | – | – |
| Total distributions | (.68) | – | – | – | – |
| Redemption fees added to paid in capitalB | .01 | –C | –C | .01 | –C |
| Net asset value, end of period | $21.02 | $18.12 | $18.50 | $22.41 | $30.72 |
| Total ReturnD | 20.38% | (2.05)% | (17.45)% | (27.05)% | (33.16)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .87% | .97% | .94% | .94% | .93% |
| Expenses net of fee waivers, if any | .84% | .93% | .90% | .92% | .92% |
| Expenses net of all reductions | .84% | .93% | .90% | .91% | .92% |
| Net investment income (loss) | (.39)% | (.17)% | (.22)% | .27% | .43% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,271,458 | $1,076,206 | $992,944 | $1,275,913 | $2,301,019 |
| Portfolio turnover rateG | 28% | 20% | 20% | 56% | 18% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Financial Highlights — Gold Portfolio Class I
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $18.13 | $18.50 | $22.41 | $30.69 | $45.87 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.09) | (.02) | (.04) | .07 | .20 |
| Net realized and unrealized gain (loss) | 3.67 | (.35) | (3.87) | (8.36) | (15.38) |
| Total from investment operations | 3.58 | (.37) | (3.91) | (8.29) | (15.18) |
| Distributions from net realized gain | (.70) | – | – | – | – |
| Total distributions | (.70) | – | – | – | – |
| Redemption fees added to paid in capitalB | .01 | –C | –C | .01 | –C |
| Net asset value, end of period | $21.02 | $18.13 | $18.50 | $22.41 | $30.69 |
| Total ReturnD | 20.41% | (2.00)% | (17.45)% | (26.98)% | (33.09)% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .87% | .92% | .90% | .87% | .84% |
| Expenses net of fee waivers, if any | .84% | .88% | .86% | .85% | .83% |
| Expenses net of all reductions | .84% | .88% | .86% | .84% | .82% |
| Net investment income (loss) | (.39)% | (.12)% | (.18)% | .34% | .52% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $58,673 | $52,607 | $23,667 | $107,830 | $128,262 |
| Portfolio turnover rateG | 28% | 20% | 20% | 56% | 18% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the consolidated financial statements.
Notes to Consolidated Financial Statements
For the period ended February 28, 2017
1. Organization.
Gold Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Gold and Class I shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class.
After the close of business on June 24, 2016, all outstanding Class B shares were converted to Class A shares. All current fiscal period dollar and share amounts for Class B presented in the Notes to Consolidated Financial Statements are for the period March 1, 2016 through June 24, 2016.
In March 2017, the Board of Trustees approved a change in the name of Class T to Class M effective after the close of business on March 24, 2017.
2. Consolidated Subsidiary.
The Fund invests in certain commodity-related investments through Fidelity Select Gold Cayman Ltd, a wholly owned subsidiary (the "Subsidiary"). As of period end, the Fund held an investment of $87,787,763 in the Subsidiary, representing 5.7% of the Fund's net assets.
The financial statements have been consolidated and include accounts of the Fund and the Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated.
3. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Consolidated Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
4. Significant Accounting Policies.
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in commodities are valued at their last traded price at 4:00 p.m. Eastern time each business day and are categorized as Level 1 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 28, 2017, including information on transfers between Levels 1 and 2, is included at the end of the Fund's Consolidated Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Fund represent a return of capital or capital gain. The Fund determines the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Consolidated Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2017, the Fund did not have any unrecognized tax benefits in the consolidated financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary's income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the consolidated financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), controlled foreign corporation, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end on an unconsolidated basis were as follows:
| Gross unrealized appreciation | $290,781,302 |
| Gross unrealized depreciation | (395,611,347) |
| Net unrealized appreciation (depreciation) on securities | $(104,830,045) |
| Tax Cost | $1,651,011,417 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $2,999,109 |
| Capital loss carryforward | $(1,218,001,068) |
| Net unrealized appreciation (depreciation) on securities and other investments | $(104,839,163) |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| No expiration | |
| Short-term | $(140,407,726) |
| Long-term | (1,077,593,342) |
| Total capital loss carryforward | $(1,218,001,068) |
The tax character of distributions paid was as follows:
| February 28, 2017 | February 29, 2016 | |
| Ordinary Income | $47,051,891 | $– |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital. In November 2016, the Board of Trustees approved the elimination of these redemption fees effective December 12, 2016.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Consolidated Schedule of Investments.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $531,160,049 and $456,022,645, respectively.
6. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease.
FMR, either through itself or through an affiliate provides investment management related services to the Subsidiary for which the Subsidiary pays a monthly management fee at the annual rate of .30% of its net assets. Under the management contract with the subsidiary, FMR pays all other expenses of the Subsidiary, except custodian fees.
For the reporting period, the total consolidated annual management fee rate which includes the management fee of the Fund and the Subsidiary was .57% of the Fund's average net assets.
During the period, the investment adviser waived a portion of the Fund's management fee representing the amount of the management fee paid by the Subsidiary to FMR as described in the Expense Reductions note.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution Fee | Service Fee | Total Fees | Retained by FDC | |
| Class A | -% | .25% | $218,687 | $1,445 |
| Class T | .25% | .25% | 130,979 | 132 |
| Class B | .75% | .25% | 4,112 | 3,086 |
| Class C | .75% | .25% | 935,593 | 341,534 |
| $1,289,371 | $346,197 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $99,491 |
| Class T | 15,214 |
| Class B(a) | 45 |
| Class C(a) | 22,697 |
| $137,447 |
(a) When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc., (FIIOC), an affiliate of the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $247,853 | .28 |
| Class T | 86,396 | .33 |
| Class B | 1,090 | .27 |
| Class C | 202,946 | .22 |
| Gold | 2,964,629 | .21 |
| Class I | 139,192 | .21 |
| $3,642,106 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Consolidated Statement of Operations. The commissions paid to these affiliated firms were $8,571 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense |
| Borrower | $6,242,148 | .65% | $3,044 |
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Other. During the period, the investment adviser reimbursed the Fund for certain losses in the amount of $4,125.
7. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,499 and is reflected in Miscellaneous expenses on the Consolidated Statement of Operations. During the period, the Fund did not borrow on this line of credit.
8. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Consolidated Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Consolidated Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $10,665.
9. Expense Reductions.
The investment adviser has contractually agreed to waive the Fund's management fee in an amount equal to the management fee paid by the Subsidiary to FMR. During the period, this waiver reduced the Fund's management fee by $471,109.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $35,346 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $9,536.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| From net realized gain | ||
| Class A | $2,221,326 | $– |
| Class T | 587,030 | – |
| Class C | 2,039,868 | – |
| Gold | 40,224,766 | – |
| Class I | 1,978,901 | – |
| Total | $47,051,891 | $– |
11. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
| Shares | Shares | Dollars | Dollars | |
| Year ended February 28, 2017 | Year ended February 29, 2016 | Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Class A | ||||
| Shares sold | 3,164,607 | 1,535,243 | $69,537,871 | $23,173,408 |
| Reinvestment of distributions | 120,564 | – | 2,146,978 | – |
| Shares redeemed | (2,238,855) | (1,100,912) | (48,377,613) | (16,009,093) |
| Net increase (decrease) | 1,046,316 | 434,331 | $23,307,236 | $7,164,315 |
| Class T | ||||
| Shares sold | 712,177 | 373,972 | $15,561,760 | $5,610,984 |
| Reinvestment of distributions | 32,071 | – | 560,038 | – |
| Shares redeemed | (517,783) | (262,516) | (11,004,318) | (3,867,307) |
| Net increase (decrease) | 226,465 | 111,456 | $5,117,480 | $1,743,677 |
| Class B | ||||
| Shares sold | 7,043 | 6,237 | $134,526 | $87,905 |
| Shares redeemed | (89,907) | (65,868) | (1,923,575) | (948,946) |
| Net increase (decrease) | (82,864) | (59,631) | $(1,789,049) | $(861,041) |
| Class C | ||||
| Shares sold | 3,277,150 | 1,382,064 | $68,100,712 | $19,834,455 |
| Reinvestment of distributions | 115,019 | – | 1,909,405 | – |
| Shares redeemed | (1,324,351) | (513,567) | (26,570,952) | (7,072,215) |
| Net increase (decrease) | 2,067,818 | 868,497 | $43,439,165 | $12,762,240 |
| Gold | ||||
| Shares sold | 44,152,495 | 25,445,576 | $998,832,934 | $393,817,498 |
| Reinvestment of distributions | 2,098,203 | – | 38,476,693 | – |
| Shares redeemed | (45,146,079) | (19,739,546) | (990,273,602) | (303,052,757) |
| Net increase (decrease) | 1,104,619 | 5,706,030 | $47,036,025 | $90,764,741 |
| Class I | ||||
| Shares sold | 2,033,849 | 2,727,491 | $45,606,027 | $42,106,104 |
| Reinvestment of distributions | 97,474 | – | 1,788,422 | – |
| Shares redeemed | (2,240,667) | (1,105,474) | (49,737,421) | (16,369,331) |
| Net increase (decrease) | (109,344) | 1,622,017 | $(2,342,972) | $25,736,773 |
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Materials Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Materials Portfolio | 30.52% | 7.29% | 7.84% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Materials Portfolio, a class of the fund, on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $21,262 | Materials Portfolio | |
| $20,834 | S&P 500® Index | |
Materials Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Tobias Welo: For the year, the fund’s share classes (excluding sales charges, if applicable) returned roughly 29% to 31%, trailing the 34.26% gain of the MSCI U.S. IMI Materials 25/50 Index, but topping the S&P 500®. Despite a robust rally in materials stocks fueled by post-election optimism, my focus on stocks with positive cyclical drivers was less effective this period. Versus the MSCI sector index, negligible exposure to the strong-performing steel group hampered fund results, as did stock picking in fertilizers & agricultural chemicals and untimely ownership of gold equities. A large overweighting in paper-packaging provider Graphic Packaging Holding was the fund’s largest relative detractor. The stock considerably underperformed our industry index this period, partly due to weakness in paperboard prices. Other detractors included sizable overweightings in specialty chemicals provider W.R. Grace and fertilizer maker CF Industries Holdings. Conversely, picks in construction materials and commodity chemicals were noteworthy positives, along with a sizable underweighting in the lagging industrial-gases group and a meaningful overweighting in the strong-performing paper-packaging segment. In the latter category, our top contributor was WestRock, the fund's second-largest holding at period end. Our large overweighting in this stock reflected my belief in the longer-term promise of the union of MeadWestvaco and Rock-Tenn in July 2015, from which WestRock was formed. Another standout and significant overweighting for the fund was construction materials supplier Eagle Materials.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Materials Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| E.I. du Pont de Nemours & Co. | 15.3 | 15.5 |
| WestRock Co. | 6.4 | 7.7 |
| Monsanto Co. | 6.1 | 7.5 |
| LyondellBasell Industries NV Class A | 5.5 | 4.2 |
| Graphic Packaging Holding Co. | 4.8 | 6.1 |
| Ball Corp. | 4.6 | 5.7 |
| The Dow Chemical Co. | 4.6 | 4.9 |
| PPG Industries, Inc. | 4.4 | 4.9 |
| Ecolab, Inc. | 3.9 | 4.6 |
| Air Products & Chemicals, Inc. | 3.7 | 0.0 |
| 59.3 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Chemicals | 67.7% | |
| Containers & Packaging | 16.6% | |
| Metals & Mining | 9.4% | |
| Construction Materials | 3.3% | |
| Trading Companies & Distributors | 2.0% | |
| All Others* | 1.0% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Chemicals | 67.5% | |
| Containers & Packaging | 21.3% | |
| Metals & Mining | 5.6% | |
| Construction Materials | 4.0% | |
| Trading Companies & Distributors | 1.2% | |
| All Others* | 0.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Materials Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 99.0% | |||
| Shares | Value | ||
| Chemicals - 67.7% | |||
| Commodity Chemicals - 8.4% | |||
| LyondellBasell Industries NV Class A | 941,596 | $85,911,219 | |
| Olin Corp. | 674,300 | 20,957,244 | |
| Trinseo SA | 245,900 | 17,003,985 | |
| Westlake Chemical Corp. | 131,300 | 8,328,359 | |
| 132,200,807 | |||
| Diversified Chemicals - 27.0% | |||
| Ashland Global Holdings, Inc. | 147,200 | 17,761,152 | |
| E.I. du Pont de Nemours & Co. | 3,049,100 | 239,476,313 | |
| Eastman Chemical Co. | 614,448 | 49,309,452 | |
| The Chemours Co. LLC | 1,295,200 | 43,596,432 | |
| The Dow Chemical Co. | 1,167,800 | 72,707,228 | |
| 422,850,577 | |||
| Fertilizers & Agricultural Chemicals - 10.8% | |||
| Agrium, Inc. | 250,900 | 24,188,936 | |
| CF Industries Holdings, Inc. | 744,910 | 23,405,072 | |
| Monsanto Co. | 842,930 | 95,950,722 | |
| The Scotts Miracle-Gro Co. Class A | 286,431 | 25,959,242 | |
| 169,503,972 | |||
| Industrial Gases - 3.7% | |||
| Air Products & Chemicals, Inc. | 409,900 | 57,578,653 | |
| Specialty Chemicals - 17.8% | |||
| Axalta Coating Systems (a) | 518,700 | 15,099,357 | |
| Ecolab, Inc. | 490,820 | 60,846,955 | |
| Frutarom Industries Ltd. | 215,996 | 12,256,186 | |
| Platform Specialty Products Corp. (a) | 1,626,800 | 21,457,492 | |
| PPG Industries, Inc. | 674,700 | 69,109,521 | |
| Sherwin-Williams Co. | 148,700 | 45,879,898 | |
| W.R. Grace & Co. | 771,640 | 54,662,978 | |
| 279,312,387 | |||
| TOTAL CHEMICALS | 1,061,446,396 | ||
| Construction Materials - 3.3% | |||
| Construction Materials - 3.3% | |||
| Eagle Materials, Inc. | 504,215 | 52,292,138 | |
| Containers & Packaging - 16.6% | |||
| Metal & Glass Containers - 5.4% | |||
| Ball Corp. | 992,875 | 73,006,099 | |
| Berry Plastics Group, Inc. (a) | 242,000 | 12,179,860 | |
| 85,185,959 | |||
| Paper Packaging - 11.2% | |||
| Graphic Packaging Holding Co. | 5,680,295 | 75,831,938 | |
| WestRock Co. | 1,857,219 | 99,769,805 | |
| 175,601,743 | |||
| TOTAL CONTAINERS & PACKAGING | 260,787,702 | ||
| Metals & Mining - 9.4% | |||
| Copper - 2.9% | |||
| Freeport-McMoRan, Inc. (a) | 3,334,100 | 44,676,940 | |
| Diversified Metals & Mining - 3.6% | |||
| Alcoa Corp. | 464,800 | 16,077,432 | |
| Glencore Xstrata PLC (a) | 3,587,482 | 14,336,143 | |
| Rio Tinto PLC | 645,400 | 26,452,487 | |
| 56,866,062 | |||
| Gold - 2.9% | |||
| Barrick Gold Corp. | 820,700 | 15,144,825 | |
| Franco-Nevada Corp. | 208,300 | 13,426,113 | |
| Randgold Resources Ltd. sponsored ADR (b) | 180,800 | 16,581,168 | |
| 45,152,106 | |||
| TOTAL METALS & MINING | 146,695,108 | ||
| Trading Companies & Distributors - 2.0% | |||
| Trading Companies & Distributors - 2.0% | |||
| Nexeo Solutions, Inc. (c) | 1,116,600 | 10,339,716 | |
| Univar, Inc. (a) | 629,600 | 20,273,120 | |
| 30,612,836 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $1,215,382,264) | 1,551,834,180 | ||
| Money Market Funds - 2.4% | |||
| Fidelity Cash Central Fund, 0.60% (d) | 26,183,408 | 26,188,645 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (d)(e) | 12,517,902 | 12,520,406 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $38,706,553) | 38,709,051 | ||
| TOTAL INVESTMENT PORTFOLIO - 101.4% | |||
| (Cost $1,254,088,817) | 1,590,543,231 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.4)% | (22,668,422) | ||
| NET ASSETS - 100% | $1,567,874,809 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $10,339,716 or 0.7% of net assets.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(e) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| Nexeo Solutions, Inc. | 6/9/16 | $11,166,000 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $64,287 |
| Fidelity Securities Lending Cash Central Fund | 89,092 |
| Total | $153,379 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $1,551,834,180 | $1,525,381,693 | $26,452,487 | $-- |
| Money Market Funds | 38,709,051 | 38,709,051 | -- | -- |
| Total Investments in Securities: | $1,590,543,231 | $1,564,090,744 | $26,452,487 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 85.6% |
| Netherlands | 5.5% |
| Canada | 3.3% |
| Bailiwick of Jersey | 2.0% |
| United Kingdom | 1.7% |
| Luxembourg | 1.1% |
| Others (Individually Less Than 1%) | 0.8% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Materials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $12,408,363) — See accompanying schedule: Unaffiliated issuers (cost $1,215,382,264) | $1,551,834,180 | |
| Fidelity Central Funds (cost $38,706,553) | 38,709,051 | |
| Total Investments (cost $1,254,088,817) | $1,590,543,231 | |
| Foreign currency held at value (cost $19,790) | 19,388 | |
| Receivable for fund shares sold | 2,720,643 | |
| Dividends receivable | 3,046,320 | |
| Distributions receivable from Fidelity Central Funds | 19,080 | |
| Prepaid expenses | 5,272 | |
| Other receivables | 99,232 | |
| Total assets | 1,596,453,166 | |
| Liabilities | ||
| Payable for investments purchased | $10,612,092 | |
| Payable for fund shares redeemed | 4,192,323 | |
| Accrued management fee | 704,469 | |
| Distribution and service plan fees payable | 129,497 | |
| Other affiliated payables | 297,515 | |
| Other payables and accrued expenses | 127,211 | |
| Collateral on securities loaned | 12,515,250 | |
| Total liabilities | 28,578,357 | |
| Net Assets | $1,567,874,809 | |
| Net Assets consist of: | ||
| Paid in capital | $1,219,514,455 | |
| Undistributed net investment income | 2,492,054 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 9,423,575 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 336,444,725 | |
| Net Assets | $1,567,874,809 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($229,085,975 ÷ 2,818,905 shares) | $81.27 | |
| Maximum offering price per share (100/94.25 of $81.27) | $86.23 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($40,935,304 ÷ 507,531 shares) | $80.66 | |
| Maximum offering price per share (100/96.50 of $80.66) | $83.59 | |
| Class C: | ||
| Net Asset Value and offering price per share ($80,225,272 ÷ 1,019,159 shares)(a) | $78.72 | |
| Materials: | ||
| Net Asset Value, offering price and redemption price per share ($882,504,037 ÷ 10,809,628 shares) | $81.64 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($335,124,221 ÷ 4,112,229 shares) | $81.49 |
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $29,133,077 | |
| Income from Fidelity Central Funds | 153,379 | |
| Total income | 29,286,456 | |
| Expenses | ||
| Management fee | $7,904,862 | |
| Transfer agent fees | 3,070,538 | |
| Distribution and service plan fees | 1,420,989 | |
| Accounting and security lending fees | 456,285 | |
| Custodian fees and expenses | 45,540 | |
| Independent trustees' fees and expenses | 31,309 | |
| Registration fees | 118,755 | |
| Audit | 50,408 | |
| Legal | 21,488 | |
| Interest | 1,640 | |
| Miscellaneous | 20,582 | |
| Total expenses before reductions | 13,142,396 | |
| Expense reductions | (93,787) | 13,048,609 |
| Net investment income (loss) | 16,237,847 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 46,427,248 | |
| Redemptions in-kind with affiliated entities | 17,720,821 | |
| Fidelity Central Funds | 4,670 | |
| Foreign currency transactions | (57,126) | |
| Total net realized gain (loss) | 64,095,613 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 293,430,621 | |
| Assets and liabilities in foreign currencies | (9,689) | |
| Total change in net unrealized appreciation (depreciation) | 293,420,932 | |
| Net gain (loss) | 357,516,545 | |
| Net increase (decrease) in net assets resulting from operations | $373,754,392 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $16,237,847 | $21,289,378 |
| Net realized gain (loss) | 64,095,613 | 179,640 |
| Change in net unrealized appreciation (depreciation) | 293,420,932 | (394,277,283) |
| Net increase (decrease) in net assets resulting from operations | 373,754,392 | (372,808,265) |
| Distributions to shareholders from net investment income | (13,547,763) | (15,036,509) |
| Distributions to shareholders from net realized gain | – | (20,008,646) |
| Total distributions | (13,547,763) | (35,045,155) |
| Share transactions - net increase (decrease) | (113,259,980) | (326,507,843) |
| Redemption fees | 17,097 | 36,485 |
| Total increase (decrease) in net assets | 246,963,746 | (734,324,778) |
| Net Assets | ||
| Beginning of period | 1,320,911,063 | 2,055,235,841 |
| End of period | $1,567,874,809 | $1,320,911,063 |
| Other Information | ||
| Undistributed net investment income end of period | $2,492,054 | $– |
| Distributions in excess of net investment income end of period | $– | $(45,053) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Materials Portfolio Class A
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $62.94 | $80.43 | $86.46 | $73.44 | $69.23 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .70 | .79 | .51 | .36 | .70 |
| Net realized and unrealized gain (loss) | 18.26 | (16.80) | 1.05 | 14.56 | 5.69 |
| Total from investment operations | 18.96 | (16.01) | 1.56 | 14.92 | 6.39 |
| Distributions from net investment income | (.63) | (.58) | (.43) | (.30) | (.63) |
| Distributions from net realized gain | – | (.91) | (7.17) | (1.60) | (1.55) |
| Total distributions | (.63) | (1.48)C | (7.59)D | (1.90) | (2.18) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $81.27 | $62.94 | $80.43 | $86.46 | $73.44 |
| Total ReturnF,G | 30.18% | (20.01)% | 2.20% | 20.46% | 9.40% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.08% | 1.06% | 1.06% | 1.10% | 1.13% |
| Expenses net of fee waivers, if any | 1.08% | 1.06% | 1.06% | 1.10% | 1.13% |
| Expenses net of all reductions | 1.07% | 1.06% | 1.06% | 1.09% | 1.12% |
| Net investment income (loss) | .96% | 1.09% | .61% | .45% | 1.02% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $229,086 | $202,747 | $319,740 | $336,777 | $219,627 |
| Portfolio turnover rateJ | 49%K | 64% | 76%K | 53% | 61% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $1.48 per share is comprised of distributions from net investment income of $.575 and distributions from net realized gain of $.906 per share.
D Total distributions of $7.59 per share is comprised of distributions from net investment income of $.425 and distributions from net realized gain of $7.167 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Total returns do not include the effect of the sales charges.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Materials Portfolio Class T
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $62.52 | $79.95 | $85.99 | $73.05 | $68.91 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .47 | .56 | .25 | .12 | .50 |
| Net realized and unrealized gain (loss) | 18.12 | (16.69) | 1.06 | 14.48 | 5.66 |
| Total from investment operations | 18.59 | (16.13) | 1.31 | 14.60 | 6.16 |
| Distributions from net investment income | (.45) | (.40) | (.18) | (.06) | (.46) |
| Distributions from net realized gain | – | (.91) | (7.17) | (1.60) | (1.55) |
| Total distributions | (.45) | (1.30)C | (7.35) | (1.66) | (2.02)D |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $80.66 | $62.52 | $79.95 | $85.99 | $73.05 |
| Total ReturnF,G | 29.78% | (20.27)% | 1.90% | 20.10% | 9.10% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.39% | 1.38% | 1.37% | 1.40% | 1.42% |
| Expenses net of fee waivers, if any | 1.39% | 1.37% | 1.37% | 1.40% | 1.42% |
| Expenses net of all reductions | 1.38% | 1.37% | 1.37% | 1.39% | 1.41% |
| Net investment income (loss) | .65% | .77% | .31% | .15% | .73% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $40,935 | $30,118 | $45,252 | $45,223 | $37,860 |
| Portfolio turnover rateJ | 49%K | 64% | 76%K | 53% | 61% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $1.30 per share is comprised of distributions from net investment income of $.395 and distributions from net realized gain of $.906 per share.
D Total distributions of $2.02 per share is comprised of distributions from net investment income of $.463 and distributions from net realized gain of $1.552 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Total returns do not include the effect of the sales charges.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Materials Portfolio Class C
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $61.09 | $78.12 | $84.38 | $71.96 | $67.98 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .15 | .24 | (.12) | (.23) | .18 |
| Net realized and unrealized gain (loss) | 17.68 | (16.28) | 1.03 | 14.23 | 5.55 |
| Total from investment operations | 17.83 | (16.04) | .91 | 14.00 | 5.73 |
| Distributions from net investment income | (.20) | (.08) | – | – | (.20) |
| Distributions from net realized gain | – | (.91) | (7.17) | (1.58) | (1.55) |
| Total distributions | (.20) | (.99) | (7.17) | (1.58) | (1.75) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $78.72 | $61.09 | $78.12 | $84.38 | $71.96 |
| Total ReturnD,E | 29.21% | (20.61)% | 1.43% | 19.56% | 8.58% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | 1.83% | 1.81% | 1.82% | 1.85% | 1.89% |
| Expenses net of fee waivers, if any | 1.82% | 1.81% | 1.82% | 1.85% | 1.89% |
| Expenses net of all reductions | 1.82% | 1.81% | 1.82% | 1.84% | 1.88% |
| Net investment income (loss) | .21% | .34% | (.14)% | (.30)% | .26% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $80,225 | $66,896 | $107,697 | $106,879 | $75,007 |
| Portfolio turnover rateH | 49%I | 64% | 76%I | 53% | 61% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Total returns do not include the effect of the contingent deferred sales charge.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Materials Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.20 | $80.77 | $86.81 | $73.68 | $69.41 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .90 | .98 | .73 | .58 | .90 |
| Net realized and unrealized gain (loss) | 18.34 | (16.89) | 1.05 | 14.63 | 5.71 |
| Total from investment operations | 19.24 | (15.91) | 1.78 | 15.21 | 6.61 |
| Distributions from net investment income | (.80) | (.76) | (.65) | (.48) | (.79) |
| Distributions from net realized gain | – | (.91) | (7.17) | (1.60) | (1.55) |
| Total distributions | (.80) | (1.66)C | (7.82) | (2.08) | (2.34) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $81.64 | $63.20 | $80.77 | $86.81 | $73.68 |
| Total ReturnE | 30.52% | (19.81)% | 2.46% | 20.80% | 9.71% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .81% | .81% | .80% | .82% | .85% |
| Expenses net of fee waivers, if any | .81% | .81% | .80% | .82% | .85% |
| Expenses net of all reductions | .81% | .80% | .80% | .82% | .84% |
| Net investment income (loss) | 1.22% | 1.34% | .87% | .73% | 1.30% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $882,504 | $711,985 | $1,107,689 | $1,231,942 | $1,146,782 |
| Portfolio turnover rateH | 49%I | 64% | 76%I | 53% | 61% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $1.66 per share is comprised of distributions from net investment income of $.756 and distributions from net realized gain of $.906 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Materials Portfolio Class I
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.07 | $80.60 | $86.66 | $73.57 | $69.35 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .91 | 1.00 | .74 | .59 | .90 |
| Net realized and unrealized gain (loss) | 18.31 | (16.86) | 1.05 | 14.60 | 5.70 |
| Total from investment operations | 19.22 | (15.86) | 1.79 | 15.19 | 6.60 |
| Distributions from net investment income | (.80) | (.77) | (.68) | (.50) | (.83) |
| Distributions from net realized gain | – | (.91) | (7.17) | (1.60) | (1.55) |
| Total distributions | (.80) | (1.67)C | (7.85) | (2.10) | (2.38) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $81.49 | $63.07 | $80.60 | $86.66 | $73.57 |
| Total ReturnE | 30.55% | (19.79)% | 2.49% | 20.81% | 9.71% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .79% | .78% | .78% | .81% | .85% |
| Expenses net of fee waivers, if any | .79% | .78% | .78% | .81% | .85% |
| Expenses net of all reductions | .78% | .78% | .78% | .81% | .84% |
| Net investment income (loss) | 1.25% | 1.37% | .89% | .74% | 1.30% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $335,124 | $306,145 | $468,371 | $333,963 | $246,696 |
| Portfolio turnover rateH | 49%I | 64% | 76%I | 53% | 61% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $1.67 per share is comprised of distributions from net investment income of $.767 and distributions from net realized gain of $.906 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2017
1. Organization.
Materials Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Materials and Class I shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class.
After the close of business on June 24, 2016, all outstanding Class B shares were converted to Class A shares. All current fiscal period dollar and share amounts for Class B presented in the Notes to Financial Statements are for the period March 1, 2016 through June 24, 2016.
In March 2017, the Board of Trustees approved a change in the name of Class T to Class M effective after the close of business on March 24, 2017.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 28, 2017 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Fund represent a return of capital or capital gain. The Fund determines the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan), independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2017, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to in-kind transactions, foreign currency transactions, deferred trustees compensations, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $355,770,575 |
| Gross unrealized depreciation | (24,555,933) |
| Net unrealized appreciation (depreciation) on securities | $331,214,642 |
| Tax Cost | $1,259,328,589 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $2,568,977 |
| Undistributed long-term capital gain | $15,355,441 |
| Net unrealized appreciation (depreciation) on securities and other investments | $331,204,953 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| Fiscal year of expiration | |
| 2018 | $(611,309) |
| 2019 | (80,787) |
| Total with expiration | $(692,096) |
The Fund acquired $692,096 of its capital loss carryforward as part of a merger in a prior period. The losses acquired that will be available to offset future capital gains of the Fund will be limited to approximately $611,309 per year.
The tax character of distributions paid was as follows:
| February 28, 2017 | February 29, 2016 | |
| Ordinary Income | $13,547,763 | $ 15,036,509 |
| Long-term Capital Gains | – | 20,008,646 |
| Total | $13,547,763 | $ 35,045,155 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital. In November 2016, the Board of Trustees approved the elimination of these redemption fees effective December 12, 2016.
Restricted Securities. The Fund may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of the Fund's Schedule of Investments.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, aggregated $693,566,413 and $738,416,796, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution Fee | Service Fee | Total Fees | Retained by FDC | |
| Class A | -% | .25% | $523,269 | $– |
| Class T | .25% | .25% | 170,918 | – |
| Class B | .75% | .25% | 9,283 | 6,962 |
| Class C | .75% | .25% | 717,519 | 48,804 |
| $1,420,989 | $55,766 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $62,168 |
| Class T | 6,901 |
| Class B(a) | 132 |
| Class C(a) | 4,512 |
| $73,713 |
(a) When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc., (FIIOC), an affiliate of the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $473,160 | .23 |
| Class T | 97,978 | .29 |
| Class B | 2,396 | .26 |
| Class C | 161,032 | .22 |
| Materials | 1,705,128 | .21 |
| Class I | 630,844 | .19 |
| $3,070,538 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $22,121 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense |
| Borrower | $6,565,000 | .60% | $1,640 |
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Redemptions In-Kind. During the period, 845,013 shares of the Fund held by an affiliated entity were redeemed in-kind for investments and cash with a value of $60,325,459. The net realized gain of $17,720,821 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 10: Share Transactions. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $4,299 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $89,092.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $81,087 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of fund-level operating expenses in the amount of $12,700.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| From net investment income | ||
| Class A | $1,672,756 | $1,939,569 |
| Class T | 205,222 | 197,484 |
| Class C | 195,843 | 96,966 |
| Materials | 8,304,133 | 8,906,972 |
| Class I | 3,169,809 | 3,895,518 |
| Total | $13,547,763 | $15,036,509 |
| From net realized gain | ||
| Class A | $– | $3,076,815 |
| Class T | – | 454,774 |
| Class B | – | 50,258 |
| Class C | – | 1,065,857 |
| Materials | – | 10,731,466 |
| Class I | – | 4,629,476 |
| Total | $– | $20,008,646 |
10. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
| Shares | Shares | Dollars | Dollars | |
| Year ended February 28, 2017 | Year ended February 29, 2016 | Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Class A | ||||
| Shares sold | 902,923 | 820,014 | $67,495,419 | $59,881,537 |
| Reinvestment of distributions | 20,549 | 70,909 | 1,575,920 | 4,729,990 |
| Shares redeemed | (1,326,009) | (1,644,717) | (96,308,599) | (118,125,615) |
| Net increase (decrease) | (402,537) | (753,794) | $(27,237,260) | $(53,514,088) |
| Class T | ||||
| Shares sold | 158,674 | 84,811 | $11,939,333 | $5,963,121 |
| Reinvestment of distributions | 2,663 | 9,611 | 202,830 | 637,500 |
| Shares redeemed | (135,543) | (178,706) | (9,849,995) | (12,734,979) |
| Net increase (decrease) | 25,794 | (84,284) | $2,292,168 | $(6,134,358) |
| Class B | ||||
| Shares sold | 325 | 1,827 | $22,444 | $136,913 |
| Reinvestment of distributions | – | 717 | – | 46,833 |
| Shares redeemed | (49,631) | (36,076) | (3,403,614) | (2,579,948) |
| Net increase (decrease) | (49,306) | (33,532) | $(3,381,170) | $(2,396,202) |
| Class C | ||||
| Shares sold | 197,093 | 141,291 | $14,487,205 | $10,125,628 |
| Reinvestment of distributions | 2,419 | 16,060 | 179,992 | 1,043,658 |
| Shares redeemed | (275,454) | (440,847) | (19,415,602) | (30,549,327) |
| Net increase (decrease) | (75,942) | (283,496) | $(4,748,405) | $(19,380,041) |
| Materials | ||||
| Shares sold | 2,367,980 | 1,388,149 | $176,958,165 | $101,563,248 |
| Reinvestment of distributions | 100,563 | 273,187 | 7,743,369 | 18,281,510 |
| Shares redeemed | (2,924,430) | (4,109,408) | (214,559,584) | (297,748,381) |
| Net increase (decrease) | (455,887) | (2,448,072) | $(29,858,050) | $(177,903,623) |
| Class I | ||||
| Shares sold | 1,754,029 | 1,480,820 | $130,244,335 | $107,996,943 |
| Reinvestment of distributions | 37,780 | 118,643 | 2,903,738 | 7,923,047 |
| Shares redeemed | (2,533,375)(a) | (2,556,391) | (183,475,336)(a) | (183,099,521) |
| Net increase (decrease) | (741,566) | (956,928) | $(50,327,263) | $(67,179,531) |
(a) Amount includes in-kind redemptions (see Note 5: Redemptions In-Kind).
11. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Chemicals Portfolio, Gold Portfolio and Materials Portfolio:
In our opinion, the accompanying statements of assets and liabilities (consolidated statement of assets and liabilities for Gold Portfolio), including the schedules of investments (consolidated schedule of investments for Gold Portfolio), and the related statements of operations (consolidated statement of operations for Gold Portfolio) and of changes in net assets (consolidated changes in net assets for Gold Portfolio) and the financial highlights (consolidated financial highlights for Gold Portfolio) present fairly, in all material respects, the financial positions of Chemicals Portfolios, Gold Portfolio and Materials Portfolio (funds of Fidelity Select portfolios) as of February 28, 2017, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fidelity Select Portfolios' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of February 28, 2017 by correspondence with the custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2017
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 90 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the funds is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Each fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
* Determined to be an "Interested Trustee" by virtue of, among other things, his or her affiliation with the trust or various entities under common control with SelectCo.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed the oil refining, drilling and marketing of petroleum products (including specialty petroleum products), recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present) and serves as its President and CEO. Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006. Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Trustee or Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006), and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue serves as a Member (2012-present) and Co-Chairman (2016-present) of the Board of Directors of United Way of New York, Member of the Board of Directors of NYC Leadership Academy (2012-present) and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services), Treasurer of United Way of New York (2012-2016), and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Carol B. Tomé (1957)
Year of Election or Appointment: 2017
Member of the Advisory Board
Ms. Tomé also serves as Trustee or Member of the Advisory Board of other Fidelity® funds. Ms. Tomé is Chief Financial Officer (2001-present) and Executive Vice President of Corporate Services (2007-present) of The Home Depot, Inc. (home improvement retailer) and a Director (2003-present) and Chair of the Audit Committee (2004-present) of United Parcel Service, Inc. (package delivery and supply chain management). Previously, Ms. Tomé served as Senior Vice President of Finance and Accounting/Treasurer (2000-2007) and Vice President and Treasurer (1995-2000) of The Home Depot, Inc. and Chair of the Board (2010-2012), Vice Chair of the Board (2009 and 2013), and a Director (2008-2013) of the Federal Reserve Bank of Atlanta. Ms. Tomé is also a director or trustee of many community and professional organizations.
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Interim Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (UK) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
Jeffrey S. Christian (1961)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Christian also serves as Assistant Treasurer of other funds. Mr. Christian is an employee of Fidelity Investments (2003-present).
William C. Coffey (1969)
Year of Election or Appointment: 2009
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Senior Vice President of Fidelity Management & Research Company (FMR) (investment adviser firm, 2016), Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of FMR (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
Colm A. Hogan (1973)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan is an employee of Fidelity Investments (2005-present). Mr. Colm A. Hogan is not related to Mr. Brian B. Hogan.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche (accounting firm, 2005-2013).
Renee Stagnone (1975)
Year of Election or Appointment: 2016
Assistant Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2016 to February 28, 2017).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio-A | Beginning Account Value September 1, 2016 | Ending Account Value February 28, 2017 | Expenses Paid During Period-B September 1, 2016 to February 28, 2017 | |
| Chemicals Portfolio | .79% | |||
| Actual | $1,000.00 | $1,167.00 | $4.24 | |
| Hypothetical-C | $1,000.00 | $1,020.88 | $3.96 | |
| Gold Portfolio | ||||
| Class A | 1.16% | |||
| Actual | $1,000.00 | $906.70 | $5.48 | |
| Hypothetical-C | $1,000.00 | $1,019.04 | $5.81 | |
| Class T | 1.46% | |||
| Actual | $1,000.00 | $905.00 | $6.90 | |
| Hypothetical-C | $1,000.00 | $1,017.55 | $7.30 | |
| Class C | 1.83% | |||
| Actual | $1,000.00 | $903.50 | $8.64 | |
| Hypothetical-C | $1,000.00 | $1,015.72 | $9.15 | |
| Gold | .84% | |||
| Actual | $1,000.00 | $908.10 | $3.97 | |
| Hypothetical-C | $1,000.00 | $1,020.63 | $4.21 | |
| Class I | .84% | |||
| Actual | $1,000.00 | $908.50 | $3.97 | |
| Hypothetical-C | $1,000.00 | $1,020.63 | $4.21 | |
| Materials Portfolio | ||||
| Class A | 1.07% | |||
| Actual | $1,000.00 | $1,103.20 | $5.58 | |
| Hypothetical-C | $1,000.00 | $1,019.49 | $5.36 | |
| Class T | 1.38% | |||
| Actual | $1,000.00 | $1,101.50 | $7.19 | |
| Hypothetical-C | $1,000.00 | $1,017.95 | $6.90 | |
| Class C | 1.82% | |||
| Actual | $1,000.00 | $1,099.00 | $9.47 | |
| Hypothetical-C | $1,000.00 | $1,015.77 | $9.10 | |
| Materials | .81% | |||
| Actual | $1,000.00 | $1,104.50 | $4.23 | |
| Hypothetical-C | $1,000.00 | $1,020.78 | $4.06 | |
| Class I | .79% | |||
| Actual | $1,000.00 | $1,104.60 | $4.12 | |
| Hypothetical-C | $1,000.00 | $1,020.88 | $3.96 | |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains | |
| Chemicals Portfolio | 04/13/2017 | 04/12/2017 | $0.081 | $6.185 |
| Gold Portfolio | 04/13/2017 | 04/12/2017 | $0.000 | $0.046 |
| Materials Portfolio | 04/13/2017 | 04/12/2017 | $0.147 | $0.798 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2017, or, if subsequently determined to be different, the net capital gain of such year.
| Chemicals Portfolio | $59,093,347 |
| Materials Portfolio | $15,928,366 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 2016 | December 2016 | |
| Chemicals Portfolio | – | 48% |
| Gold Portfolio | 3% | 3% |
| Materials | – | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| April 2016 | December 2016 | |
| Chemicals Portfolio | – | 56% |
| Gold Portfolio | 25% | 24% |
| Materials Portfolio | – | 100% |
The amounts per share which represent income derived from sources within, and taxes paid to, foreign countries or possessions of the United States are as follows:
| Pay Date | Income | Taxes | |
| Gold Portfolio | 04/18/16 | $0.0840 | $0.0037 |
| 12/19/16 | $0.0789 | $0.0093 | |
The funds will notify shareholders in January 2018 of amounts for use in preparing 2017 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Chemicals Portfolio
Gold Portfolio
Materials Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. SelectCo and the sub-advisers are collectively referred to herein as the Investment Advisers. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2017 meeting, the Board unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of the Investment Advisers as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the investment personnel compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the Investment Advisers' investment staffs, including their size, education, experience, and resources, as well as Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board considered that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, compliance, and technology and operations capabilities and resources, which are integral parts of the investment management process.Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians, subcustodians, and pricing vendors; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs; (iv) broadening eligibility requirements for certain lower-priced share classes of, and streamlining the fee structure for, certain existing equity index funds; (v) lowering expense caps for certain existing funds and classes to reduce expenses paid by shareholders; (vi) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vii) rationalizing product lines and gaining increased efficiencies through fund mergers and share class consolidations; (viii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (ix) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; and (x) accelerating the conversion of all remaining Class B shares to Class A shares, which have a lower expense structure.Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.The Board took into account discussions with representatives of SelectCo about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Materials Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2016, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address the fund's performance.In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing fund share classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors, including the following: general market conditions; issuer-specific information; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2016.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should continue to benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Chemicals Portfolio
Gold Portfolio
Materials Portfolio
SELMT-ANN-0417
1.846032.110
Fidelity® Select Portfolios® Air Transportation Portfolio Defense and Aerospace Portfolio Environment and Alternative Energy Portfolio Industrial Equipment Portfolio Industrials Portfolio Transportation Portfolio Annual Report February 28, 2017 |
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Contents
Air Transportation Portfolio | |
Defense and Aerospace Portfolio | |
Environment and Alternative Energy Portfolio | |
Industrial Equipment Portfolio | |
Industrials Portfolio | |
Transportation Portfolio | |
Board Approval of Investment Advisory Contracts and Management Fees |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2017 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Funds. This report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Funds nor Fidelity Distributors Corporation is a bank.
Air Transportation Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Air Transportation Portfolio | 26.30% | 18.52% | 9.60% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Air Transportation Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $25,005 | Air Transportation Portfolio | |
| $20,834 | S&P 500® Index | |
Air Transportation Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Matthew Moulis: For the year, the fund returned 26.30%, trailing the 30.84% gain of the S&P® Custom Air Transportation Index but outpacing the S&P 500®. Air transportation stocks were helped by several subindustry-specific factors this period, along with positive expectations surrounding the Republican presidential win in November. However, my focus on value-oriented stocks that I believe are priced cheaply relative to peers and have positive catalysts struggled this period. Versus the S&P® industry index, the fund’s results were hampered by positioning in aerospace & defense and air freight & logistics, as well as by a modest cash position. At the stock level, the largest relative detractors were aircraft manufacturers Bombardier and Boeing, both of which I significantly underweighted, although Boeing was the fund’s third-largest holding at the end of February. Bombardier – our largest relative detractor – makes narrow-body commercial jets. The company had been struggling for several years to gain acceptance for its C Series jets. However, in April 2016, the firm landed a major order from Delta Air Lines. I sold the fund’s small position here in September. In air freight & logistics, largely avoiding benchmark component XPO Logistics weighed on our relative result, given this stock’s roughly 106% return. An overweighting in JetBlue Airways also was a meaningful relative detractor this period. On the other hand, Alaska Air Group and American Airlines Group were the fund’s two largest relative contributors. In each case, we were rewarded for adding to the position on temporary weakness. American was the fund’s fourth-largest holding at the end of February.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On April 1, 2017, the fund’s industry benchmark will change from the S&P® Custom Air Transportation Index to the Nasdaq® North America Air Transportation Linked Index. Due to new international benchmark guidelines, S&P® Dow Jones® Indices has decided to stop offering its brand on custom benchmarks, effective March 31, 2017. Fidelity believes that the new Nasdaq index will continue to provide shareholders with meaningful performance comparisons.Air Transportation Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| United Parcel Service, Inc. Class B | 10.3 | 12.4 |
| FedEx Corp. | 9.7 | 9.1 |
| The Boeing Co. | 7.3 | 9.1 |
| American Airlines Group, Inc. | 7.0 | 7.9 |
| Delta Air Lines, Inc. | 6.1 | 4.5 |
| Alaska Air Group, Inc. | 5.3 | 2.0 |
| Expeditors International of Washington, Inc. | 5.0 | 1.5 |
| Southwest Airlines Co. | 4.3 | 4.4 |
| Rockwell Collins, Inc. | 3.9 | 1.1 |
| JetBlue Airways Corp. | 3.8 | 1.2 |
| 62.7 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Airlines | 38.8% | |
| Air Freight & Logistics | 29.4% | |
| Aerospace & Defense | 25.3% | |
| Road & Rail | 1.9% | |
| Machinery | 1.0% | |
| All Others* | 3.6% | |
| As of August 31, 2016 | ||
| Airlines | 40.0% | |
| Aerospace & Defense | 29.3% | |
| Air Freight & Logistics | 28.5% | |
| Machinery | 0.8% | |
| Transportation Infrastructure | 0.8% | |
| All Others* | 0.6% | |
* Includes short-term investments and net other assets (liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Air Transportation Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 95.4% | |||
| Shares | Value | ||
| Aerospace & Defense - 24.0% | |||
| Aerospace & Defense - 24.0% | |||
| Astronics Corp. (a) | 50,100 | $1,678,851 | |
| Astronics Corp. Class B | 4,755 | 162,764 | |
| BE Aerospace, Inc. | 166,200 | 10,570,320 | |
| Moog, Inc. Class A (a) | 18,800 | 1,270,504 | |
| Rockwell Collins, Inc. | 161,800 | 15,466,462 | |
| Spirit AeroSystems Holdings, Inc. Class A | 239,000 | 14,724,790 | |
| Textron, Inc. | 219,700 | 10,391,810 | |
| The Boeing Co. | 160,400 | 28,908,893 | |
| TransDigm Group, Inc. | 38,200 | 9,710,440 | |
| Wesco Aircraft Holdings, Inc. (a) | 129,000 | 1,560,900 | |
| 94,445,734 | |||
| Air Freight & Logistics - 29.4% | |||
| Air Freight & Logistics - 29.4% | |||
| Air Transport Services Group, Inc. (a) | 198,400 | 3,376,768 | |
| Atlas Air Worldwide Holdings, Inc. (a) | 40,500 | 2,302,425 | |
| C.H. Robinson Worldwide, Inc. | 50,100 | 4,026,537 | |
| Expeditors International of Washington, Inc. | 352,100 | 19,851,398 | |
| FedEx Corp. | 198,500 | 38,306,530 | |
| Forward Air Corp. | 99,150 | 4,912,883 | |
| Hub Group, Inc. Class A (a) | 34,178 | 1,725,989 | |
| Park-Ohio Holdings Corp. | 19,390 | 865,764 | |
| United Parcel Service, Inc. Class B | 381,800 | 40,379,166 | |
| 115,747,460 | |||
| Airlines - 38.8% | |||
| Airlines - 38.8% | |||
| Air Canada (a) | 339,300 | 3,418,035 | |
| Alaska Air Group, Inc. | 215,100 | 21,041,082 | |
| Allegiant Travel Co. | 22,600 | 3,934,660 | |
| American Airlines Group, Inc. | 594,100 | 27,542,476 | |
| Chorus Aviation, Inc. Class B | 171,346 | 922,394 | |
| Dart Group PLC | 101,286 | 670,507 | |
| Delta Air Lines, Inc. | 484,402 | 24,186,192 | |
| Exchange Income Corp. (b) | 80,700 | 2,305,193 | |
| Hawaiian Holdings, Inc. (a) | 124,500 | 6,056,925 | |
| JetBlue Airways Corp. (a) | 745,300 | 14,876,188 | |
| LATAM Airlines Group SA sponsored ADR (b) | 397,900 | 4,026,748 | |
| Ryanair Holdings PLC sponsored ADR (a) | 83,800 | 6,850,650 | |
| SkyWest, Inc. | 277,200 | 9,743,580 | |
| Southwest Airlines Co. | 292,800 | 16,923,840 | |
| Spirit Airlines, Inc. (a) | 103,600 | 5,408,956 | |
| WestJet Airlines Ltd. | 317,500 | 5,211,188 | |
| 153,118,614 | |||
| Internet Software & Services - 0.3% | |||
| Internet Software & Services - 0.3% | |||
| Stamps.com, Inc. (a) | 8,200 | 1,034,020 | |
| Machinery - 1.0% | |||
| Industrial Machinery - 1.0% | |||
| Global Brass& Copper Holdings, Inc. | 50,887 | 1,712,348 | |
| TriMas Corp. (a) | 101,800 | 2,244,690 | |
| 3,957,038 | |||
| Road & Rail - 1.9% | |||
| Railroads - 1.2% | |||
| Genesee & Wyoming, Inc. Class A (a) | 67,300 | 4,989,622 | |
| Trucking - 0.7% | |||
| J.B. Hunt Transport Services, Inc. | 27,700 | 2,719,309 | |
| TOTAL ROAD & RAIL | 7,708,931 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $280,844,731) | 376,011,797 | ||
| Nonconvertible Preferred Stocks - 1.3% | |||
| Aerospace & Defense - 1.3% | |||
| Aerospace & Defense - 1.3% | |||
| Embraer SA sponsored ADR | |||
| (Cost $5,055,691) | 218,300 | 5,040,547 | |
| Money Market Funds - 5.4% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 16,950,449 | 16,953,838 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 4,465,831 | 4,466,724 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $21,419,448) | 21,420,562 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.1% | |||
| (Cost $307,319,870) | 402,472,906 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.1)% | (8,330,262) | ||
| NET ASSETS - 100% | $394,142,644 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $43,531 |
| Fidelity Securities Lending Cash Central Fund | 29,223 |
| Total | $72,754 |
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Air Transportation Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $4,234,385) — See accompanying schedule: Unaffiliated issuers (cost $285,900,422) | $381,052,344 | |
| Fidelity Central Funds (cost $21,419,448) | 21,420,562 | |
| Total Investments (cost $307,319,870) | $402,472,906 | |
| Receivable for investments sold | 10,124,183 | |
| Receivable for fund shares sold | 1,174,063 | |
| Dividends receivable | 752,354 | |
| Distributions receivable from Fidelity Central Funds | 6,950 | |
| Prepaid expenses | 1,095 | |
| Other receivables | 3,275 | |
| Total assets | 414,534,826 | |
| Liabilities | ||
| Payable for investments purchased | $14,283,391 | |
| Payable for fund shares redeemed | 1,351,200 | |
| Accrued management fee | 175,685 | |
| Other affiliated payables | 79,780 | |
| Other payables and accrued expenses | 36,266 | |
| Collateral on securities loaned | 4,465,860 | |
| Total liabilities | 20,392,182 | |
| Net Assets | $394,142,644 | |
| Net Assets consist of: | ||
| Paid in capital | $295,160,762 | |
| Undistributed net investment income | 335,489 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 3,493,091 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 95,153,302 | |
| Net Assets, for 5,183,263 shares outstanding | $394,142,644 | |
| Net Asset Value, offering price and redemption price per share ($394,142,644 ÷ 5,183,263 shares) | $76.04 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $4,216,094 | |
| Income from Fidelity Central Funds | 72,754 | |
| Total income | 4,288,848 | |
| Expenses | ||
| Management fee | $1,782,868 | |
| Transfer agent fees | 737,619 | |
| Accounting and security lending fees | 127,613 | |
| Custodian fees and expenses | 15,308 | |
| Independent trustees' fees and expenses | 7,077 | |
| Registration fees | 34,447 | |
| Audit | 41,748 | |
| Legal | 4,566 | |
| Miscellaneous | 4,202 | |
| Total expenses before reductions | 2,755,448 | |
| Expense reductions | (35,633) | 2,719,815 |
| Net investment income (loss) | 1,569,033 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 15,918,054 | |
| Fidelity Central Funds | 723 | |
| Foreign currency transactions | 7,206 | |
| Total net realized gain (loss) | 15,925,983 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 53,078,403 | |
| Assets and liabilities in foreign currencies | 240 | |
| Total change in net unrealized appreciation (depreciation) | 53,078,643 | |
| Net gain (loss) | 69,004,626 | |
| Net increase (decrease) in net assets resulting from operations | $70,573,659 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $1,569,033 | $1,145,020 |
| Net realized gain (loss) | 15,925,983 | 30,519,699 |
| Change in net unrealized appreciation (depreciation) | 53,078,643 | (74,887,574) |
| Net increase (decrease) in net assets resulting from operations | 70,573,659 | (43,222,855) |
| Distributions to shareholders from net investment income | (1,185,421) | (1,079,296) |
| Distributions to shareholders from net realized gain | (1,110,453) | (32,093,843) |
| Total distributions | (2,295,874) | (33,173,139) |
| Share transactions | ||
| Proceeds from sales of shares | 189,705,911 | 137,284,032 |
| Reinvestment of distributions | 2,204,136 | 31,915,068 |
| Cost of shares redeemed | (191,690,596) | (483,119,513) |
| Net increase (decrease) in net assets resulting from share transactions | 219,451 | (313,920,413) |
| Redemption fees | 15,263 | 21,121 |
| Total increase (decrease) in net assets | 68,512,499 | (390,295,286) |
| Net Assets | ||
| Beginning of period | 325,630,145 | 715,925,431 |
| End of period | $394,142,644 | $325,630,145 |
| Other Information | ||
| Undistributed net investment income end of period | $335,489 | $– |
| Shares | ||
| Sold | 2,678,190 | 1,988,815 |
| Issued in reinvestment of distributions | 29,373 | 510,043 |
| Redeemed | (2,897,377) | (6,920,418) |
| Net increase (decrease) | (189,814) | (4,421,560) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Air Transportation Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $60.60 | $73.09 | $61.02 | $43.97 | $38.12 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .32 | .18 | .20C | .12 | .21D |
| Net realized and unrealized gain (loss) | 15.61 | (6.82) | 13.09 | 18.28 | 6.44 |
| Total from investment operations | 15.93 | (6.64) | 13.29 | 18.40 | 6.65 |
| Distributions from net investment income | (.25) | (.17) | (.08) | (.06) | (.15) |
| Distributions from net realized gain | (.24) | (5.68) | (1.14) | (1.30) | (.66) |
| Total distributions | (.49) | (5.85) | (1.23)E | (1.36) | (.80)F |
| Redemption fees added to paid in capitalB | –G | –G | .01 | .01 | –G |
| Net asset value, end of period | $76.04 | $60.60 | $73.09 | $61.02 | $43.97 |
| Total ReturnH | 26.30% | (9.24)% | 21.93% | 42.26% | 17.62% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | .85% | .83% | .83% | .87% | .94% |
| Expenses net of fee waivers, if any | .85% | .83% | .83% | .87% | .94% |
| Expenses net of all reductions | .84% | .82% | .83% | .86% | .92% |
| Net investment income (loss) | .48% | .27% | .30%C | .22% | .54%D |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $394,143 | $325,630 | $715,925 | $350,960 | $90,837 |
| Portfolio turnover rateK | 106% | 97% | 65%L | 125% | 74% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.22 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.04) %.
D Net Investment income per share reflects a large, non-recurring dividend which amounted to $.07 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .35%.
E Total distributions of $1.23 per share is comprised of distributions from net investment income of $.084 and distributions from net realized gain of $1.144 per share.
F Total distributions of $.80 per share is comprised of distributions from net investment income of $.147 and distributions from net realized gain of $.655 per share.
G Amount represents less than $.005 per share.
H Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
I Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
J Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
L Portfolio turnover rate excludes securities received or delivered in kind.
See accompanying notes which are an integral part of the financial statements.
Defense and Aerospace Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Defense and Aerospace Portfolio | 34.36% | 15.46% | 9.67% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Defense and Aerospace Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $25,176 | Defense and Aerospace Portfolio | |
| $20,834 | S&P 500® Index | |
Defense and Aerospace Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Jonathan Siegmann: For the year, the fund returned 34.36%, considerably trailing the 40.11% gain of the MSCI U.S. IMI Aerospace & Defense 25/50 Index, but outpacing the S&P 500®. Versus the MSCI industry index, unfavorable stock picking detracted from performance. A modest cash position also weighed on relative performance in a surging market. Our sizable underweighting in major index component Boeing had by far the most negative impact on the fund’s relative result. Following the November election, air traffic increased and the U.S. economy’s leading indicators strengthened, easing concerns about a downturn in the aerospace cycle. Elsewhere, five of the fund’s 10 biggest relative detractors were strong-performing small-cap or low-end mid-cap index names – primarily exposed to the defense industry – that we didn’t own or significantly underweighted. These included Kratos Defense & Security Solutions, DigitalGlobe, American Science & Engineering, KEYW Holding and Mercury Systems, which posted returns ranging from 59% to 147%. I’ll also mention defense giant Northrop Grumman, the fund’s largest overweighting at period end. Northrop returned “only” 30% this period, thus detracting from relative results despite strong absolute performance. Conversely, small positions in several out-of-index groups modestly aided results. At the stock level, our top contributor was an underweighting in Lockheed Martin that roughly corresponded to our overweighting in Northrop Grumman. Other relative contributors included meaningful overweightings in shipbuilders Huntington Ingalls Industries and General Dynamics, and in Engility Holdings, a personnel-outsourcing provider for the U.S. military and intelligence agencies.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Defense and Aerospace Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Northrop Grumman Corp. | 10.7 | 8.8 |
| General Dynamics Corp. | 9.7 | 8.4 |
| United Technologies Corp. | 9.4 | 12.9 |
| The Boeing Co. | 6.6 | 6.8 |
| Rockwell Collins, Inc. | 5.5 | 4.4 |
| TransDigm Group, Inc. | 5.0 | 6.0 |
| Huntington Ingalls Industries, Inc. | 4.6 | 4.6 |
| Raytheon Co. | 4.4 | 4.4 |
| Lockheed Martin Corp. | 3.7 | 5.2 |
| Orbital ATK, Inc. | 3.4 | 3.1 |
| 63.0 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Aerospace & Defense | 92.4% | |
| IT Services | 1.5% | |
| Trading Companies & Distributors | 0.6% | |
| Industrial Conglomerates | 0.5% | |
| Containers & Packaging | 0.4% | |
| All Others* | 4.6% | |
| As of August 31, 2016 | ||
| Aerospace & Defense | 95.9% | |
| Trading Companies & Distributors | 0.8% | |
| IT Services | 0.5% | |
| All Others* | 2.8% | |
* Includes short-term investments and net other assets (liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Defense and Aerospace Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 95.2% | |||
| Shares | Value | ||
| Aerospace & Defense - 91.9% | |||
| Aerospace & Defense - 91.9% | |||
| AeroVironment, Inc. (a) | 136,100 | $3,677,422 | |
| Airbus Group NV | 142,300 | 10,455,701 | |
| Arconic, Inc. | 581,900 | 16,752,901 | |
| Astronics Corp. (a) | 546,120 | 18,300,481 | |
| Astronics Corp. Class B | 113,234 | 3,876,000 | |
| BAE Systems PLC | 3,050,800 | 23,883,327 | |
| BE Aerospace, Inc. | 208,331 | 13,249,852 | |
| BWX Technologies, Inc. | 285,901 | 13,277,242 | |
| Elbit Systems Ltd. | 260,900 | 30,786,200 | |
| Elbit Systems Ltd. (Israel) | 24,000 | 2,837,682 | |
| Engility Holdings, Inc. (a) | 935,334 | 29,285,308 | |
| General Dynamics Corp. | 819,500 | 155,549,295 | |
| HEICO Corp. | 369,247 | 30,333,641 | |
| HEICO Corp. Class A | 491,599 | 34,878,949 | |
| Hexcel Corp. | 963,000 | 52,945,740 | |
| Huntington Ingalls Industries, Inc. | 334,074 | 72,995,169 | |
| KEYW Holding Corp. (a) | 213,054 | 2,113,496 | |
| L3 Technologies, Inc. | 31,020 | 5,221,286 | |
| Lockheed Martin Corp. | 219,015 | 58,385,019 | |
| Mercury Systems, Inc. (a) | 141,793 | 5,297,386 | |
| Moog, Inc. Class A (a) | 468,477 | 31,659,676 | |
| Northrop Grumman Corp. | 691,000 | 170,739,187 | |
| Orbital ATK, Inc. | 588,080 | 54,350,354 | |
| Raytheon Co. | 457,906 | 70,586,210 | |
| Rockwell Collins, Inc. | 915,967 | 87,557,286 | |
| Sparton Corp. (a) | 230,267 | 5,339,892 | |
| Spirit AeroSystems Holdings, Inc. Class A | 295,750 | 18,221,158 | |
| Taser International, Inc. (a)(b) | 666,603 | 17,111,699 | |
| Teledyne Technologies, Inc. (a) | 396,526 | 52,107,482 | |
| Textron, Inc. | 906,531 | 42,878,916 | |
| The Boeing Co. | 587,419 | 105,870,526 | |
| TransDigm Group, Inc. | 317,183 | 80,627,919 | |
| United Technologies Corp. | 1,337,501 | 150,535,738 | |
| 1,471,688,140 | |||
| Construction & Engineering - 0.1% | |||
| Construction & Engineering - 0.1% | |||
| KBR, Inc. | 167,700 | 2,523,885 | |
| Containers & Packaging - 0.4% | |||
| Metal & Glass Containers - 0.4% | |||
| Ball Corp. | 79,200 | 5,823,576 | |
| Diversified Telecommunication Services - 0.2% | |||
| Alternative Carriers - 0.2% | |||
| Iridium Communications, Inc. (a) | 311,800 | 2,712,660 | |
| Industrial Conglomerates - 0.5% | |||
| Industrial Conglomerates - 0.5% | |||
| Honeywell International, Inc. | 62,300 | 7,756,350 | |
| IT Services - 1.5% | |||
| IT Consulting & Other Services - 1.5% | |||
| CSRA, Inc. | 355,300 | 10,595,046 | |
| Leidos Holdings, Inc. | 267,130 | 14,238,029 | |
| 24,833,075 | |||
| Trading Companies & Distributors - 0.6% | |||
| Trading Companies & Distributors - 0.6% | |||
| Air Lease Corp. Class A | 259,200 | 10,090,656 | |
| TOTAL COMMON STOCKS | |||
| (Cost $1,086,716,398) | 1,525,428,342 | ||
| Nonconvertible Preferred Stocks - 0.5% | |||
| Aerospace & Defense - 0.5% | |||
| Aerospace & Defense - 0.5% | |||
| Embraer SA sponsored ADR | |||
| (Cost $6,223,262) | 320,200 | 7,393,418 | |
| Money Market Funds - 5.3% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 71,033,677 | 71,047,884 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 14,120,926 | 14,123,751 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $85,166,533) | 85,171,635 | ||
| TOTAL INVESTMENT PORTFOLIO - 101.0% | |||
| (Cost $1,178,106,193) | 1,617,993,395 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.0)% | (16,525,596) | ||
| NET ASSETS - 100% | $1,601,467,799 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $177,769 |
| Fidelity Securities Lending Cash Central Fund | 11,857 |
| Total | $189,626 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $1,525,428,342 | $1,491,089,314 | $34,339,028 | $-- |
| Nonconvertible Preferred Stocks | 7,393,418 | 7,393,418 | -- | -- |
| Money Market Funds | 85,171,635 | 85,171,635 | -- | -- |
| Total Investments in Securities: | $1,617,993,395 | $1,583,654,367 | $34,339,028 | $-- |
See accompanying notes which are an integral part of the financial statements.
Defense and Aerospace Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $13,553,760) — See accompanying schedule: Unaffiliated issuers (cost $1,092,939,660) | $1,532,821,760 | |
| Fidelity Central Funds (cost $85,166,533) | 85,171,635 | |
| Total Investments (cost $1,178,106,193) | $1,617,993,395 | |
| Receivable for investments sold | 8,665,379 | |
| Receivable for fund shares sold | 19,818,697 | |
| Dividends receivable | 2,431,815 | |
| Distributions receivable from Fidelity Central Funds | 28,081 | |
| Prepaid expenses | 3,690 | |
| Other receivables | 48,386 | |
| Total assets | 1,648,989,443 | |
| Liabilities | ||
| Payable for investments purchased | $31,250,966 | |
| Payable for fund shares redeemed | 1,111,108 | |
| Accrued management fee | 690,578 | |
| Other affiliated payables | 264,491 | |
| Other payables and accrued expenses | 80,501 | |
| Collateral on securities loaned | 14,124,000 | |
| Total liabilities | 47,521,644 | |
| Net Assets | $1,601,467,799 | |
| Net Assets consist of: | ||
| Paid in capital | $1,150,831,269 | |
| Undistributed net investment income | 1,273,925 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 9,475,403 | |
| Net unrealized appreciation (depreciation) on investments | 439,887,202 | |
| Net Assets, for 11,576,850 shares outstanding | $1,601,467,799 | |
| Net Asset Value, offering price and redemption price per share ($1,601,467,799 ÷ 11,576,850 shares) | $138.33 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $15,827,292 | |
| Special dividends | 4,411,673 | |
| Income from Fidelity Central Funds | 189,626 | |
| Total income | 20,428,591 | |
| Expenses | ||
| Management fee | $6,187,210 | |
| Transfer agent fees | 2,106,910 | |
| Accounting and security lending fees | 368,311 | |
| Custodian fees and expenses | 17,395 | |
| Independent trustees' fees and expenses | 23,891 | |
| Registration fees | 92,236 | |
| Audit | 42,598 | |
| Legal | 13,410 | |
| Miscellaneous | 12,739 | |
| Total expenses before reductions | 8,864,700 | |
| Expense reductions | (33,038) | 8,831,662 |
| Net investment income (loss) | 11,596,929 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 64,001,868 | |
| Fidelity Central Funds | 250 | |
| Foreign currency transactions | (680) | |
| Total net realized gain (loss) | 64,001,438 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 254,945,455 | |
| Assets and liabilities in foreign currencies | 1,089 | |
| Total change in net unrealized appreciation (depreciation) | 254,946,544 | |
| Net gain (loss) | 318,947,982 | |
| Net increase (decrease) in net assets resulting from operations | $330,544,911 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $11,596,929 | $8,362,532 |
| Net realized gain (loss) | 64,001,438 | 23,092,585 |
| Change in net unrealized appreciation (depreciation) | 254,946,544 | (146,985,736) |
| Net increase (decrease) in net assets resulting from operations | 330,544,911 | (115,530,619) |
| Distributions to shareholders from net investment income | (11,758,000) | (7,997,911) |
| Distributions to shareholders from net realized gain | (53,922,271) | (49,261,334) |
| Total distributions | (65,680,271) | (57,259,245) |
| Share transactions | ||
| Proceeds from sales of shares | 698,805,364 | 357,700,834 |
| Reinvestment of distributions | 62,788,633 | 54,856,943 |
| Cost of shares redeemed | (310,408,871) | (302,562,366) |
| Net increase (decrease) in net assets resulting from share transactions | 451,185,126 | 109,995,411 |
| Redemption fees | 19,875 | 36,853 |
| Total increase (decrease) in net assets | 716,069,641 | (62,757,600) |
| Net Assets | ||
| Beginning of period | 885,398,158 | 948,155,758 |
| End of period | $1,601,467,799 | $885,398,158 |
| Other Information | ||
| Undistributed net investment income end of period | $1,273,925 | $2,013,132 |
| Shares | ||
| Sold | 5,346,927 | 2,974,606 |
| Issued in reinvestment of distributions | 492,405 | 455,738 |
| Redeemed | (2,454,187) | (2,590,571) |
| Net increase (decrease) | 3,385,145 | 839,773 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Defense and Aerospace Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $108.08 | $128.97 | $122.55 | $91.73 | $86.02 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.28C | 1.08 | 1.06D | .77 | 1.17E |
| Net realized and unrealized gain (loss) | 35.26 | (14.72) | 13.14 | 36.34 | 5.94 |
| Total from investment operations | 36.54 | (13.64) | 14.20 | 37.11 | 7.11 |
| Distributions from net investment income | (1.15) | (1.01) | (.97) | (.64) | (1.21) |
| Distributions from net realized gain | (5.14) | (6.24) | (6.81) | (5.65) | (.19) |
| Total distributions | (6.29) | (7.25) | (7.78) | (6.29) | (1.40) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $138.33 | $108.08 | $128.97 | $122.55 | $91.73 |
| Total ReturnG | 34.36% | (11.08)% | 12.53% | 40.85% | 8.37% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .79% | .80% | .79% | .81% | .84% |
| Expenses net of fee waivers, if any | .79% | .79% | .79% | .81% | .84% |
| Expenses net of all reductions | .79% | .79% | .79% | .81% | .83% |
| Net investment income (loss) | 1.03%C | .92% | .90%D | .70% | 1.39%E |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,601,468 | $885,398 | $948,156 | $1,023,393 | $606,859 |
| Portfolio turnover rateJ | 24% | 52% | 20% | 48% | 56% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.49 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .64%.
D Net Investment income per share reflects a large, non-recurring dividend which amounted to $.66 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .34%.
E Net Investment income per share reflects a large, non-recurring dividend which amounted to $.34 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .99%.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Environment and Alternative Energy Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Environment and Alternative Energy Portfolio | 33.02% | 12.08% | 5.67% |
Prior to July 1, 2010, the fund was named Environmental Portfolio, and the fund operated under certain different investment policies and compared its performance to a different additional index. The fund's historical performance may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Environment and Alternative Energy Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $17,354 | Environment and Alternative Energy Portfolio | |
| $20,834 | S&P 500® Index | |
Environment and Alternative Energy Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Kevin Walenta: For the fiscal year, the fund returned 33.02%, beating the 27.06% gain of the FTSE® Environmental Opportunities & Alternative Energy Index and the broader market S&P 500. Security selection in the energy-efficiency group gave a particularly strong boost to relative performance, as higher U.S. oil prices shortened the payback period for investing in these types of products. Individual contributors included Innospec, a small-cap company that makes chemical additives to enhance fuel efficiency as well as non-sulfate products that go into personal care products; EnerSys, a manufacturer of large rechargeable batteries for industrial equipment; and A.O. Smith, which makes energy-efficient water heaters and air conditioning systems. EnerSys was not in the fund at period end. By contrast, a modest cash position detracted from relative results. Individual disappointments included U.K.-based Delphi Automotive, which makes auto parts that enhance the fuel efficiency of cars. Concerns that auto sales might slow in Europe and the U.S. hampered its return. An overweighting in Austria-based engineering company Andritz, one of our largest holdings at period end, also disappointed, largely because, as a non-U.S. company, it wasn’t fully exposed to the new administration’s plans for increased infrastructure spending.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Environment and Alternative Energy Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| 3M Co. | 10.5 | 2.5 |
| Honeywell International, Inc. | 8.1 | 12.0 |
| Deere & Co. | 4.3 | 5.6 |
| Ingersoll-Rand PLC | 3.6 | 2.5 |
| Iberdrola SA | 3.4 | 3.5 |
| Andritz AG | 3.1 | 3.6 |
| Cummins, Inc. | 2.5 | 4.4 |
| Danaher Corp. | 2.5 | 0.0 |
| IDACORP, Inc. | 2.4 | 2.4 |
| Crane Co. | 2.2 | 2.5 |
| 42.6 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Energy Efficiency | 30.4% | |
| Renewable & Alternative Energy | 23.8% | |
| Environmental Support Services | 12.7% | |
| Food Agriculture & Forestry | 11.3% | |
| Pollution Control | 5.5% | |
| All Others* | 16.3% | |
| As of August 31, 2016 | ||
| Energy Efficiency | 50.5% | |
| Renewable & Alternative Energy | 14.1% | |
| Food Agriculture & Forestry | 10.3% | |
| Pollution Control | 8.3% | |
| Environmental Support Services | 6.1% | |
| All Others* | 10.7% | |
* Includes short-term investments and net other assets (liabilities).
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Environment and Alternative Energy Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 96.2% | |||
| Shares | Value | ||
| Energy Efficiency - 30.4% | |||
| Buildings Energy Efficiency - 12.9% | |||
| A.O. Smith Corp. | 29,642 | $1,492,771 | |
| Apogee Enterprises, Inc. | 32,040 | 1,832,047 | |
| Carlisle Companies, Inc. | 22,165 | 2,289,645 | |
| Comfort Systems U.S.A., Inc. | 38,270 | 1,460,001 | |
| Ingersoll-Rand PLC | 61,460 | 4,877,466 | |
| Lennox International, Inc. | 16,511 | 2,718,041 | |
| Owens Corning | 49,540 | 2,897,595 | |
| 17,567,566 | |||
| Diversified Energy Efficiency - 8.1% | |||
| Honeywell International, Inc. | 89,367 | 11,126,192 | |
| Industrial Energy Efficiency - 5.8% | |||
| EMCOR Group, Inc. | 25,318 | 1,556,551 | |
| Regal Beloit Corp. | 25,584 | 1,904,729 | |
| Rockwell Automation, Inc. | 12,459 | 1,882,555 | |
| VMware, Inc. Class A (a)(b) | 29,373 | 2,640,339 | |
| 7,984,174 | |||
| Transport Energy Efficiency - 3.6% | |||
| Delphi Automotive PLC | 14,510 | 1,104,646 | |
| Hexcel Corp. | 39,600 | 2,177,208 | |
| Innospec, Inc. | 25,677 | 1,676,708 | |
| 4,958,562 | |||
| TOTAL ENERGY EFFICIENCY | 41,636,494 | ||
| Environmental Support Services - 12.7% | |||
| Diversified Environmental - 12.7% | |||
| 3M Co. | 77,242 | 14,394,042 | |
| MKS Instruments, Inc. | 21,883 | 1,435,525 | |
| Parker Hannifin Corp. | 11,096 | 1,718,105 | |
| 17,547,672 | |||
| Food Agriculture & Forestry - 11.3% | |||
| Logistics, Food Safety and Packing - 5.2% | |||
| Bemis Co., Inc. | 36,130 | 1,790,964 | |
| Bunge Ltd. | 33,940 | 2,777,989 | |
| Sealed Air Corp. | 56,700 | 2,635,416 | |
| 7,204,369 | |||
| Sustainable and Efficient Agriculture - 6.1% | |||
| Deere & Co. | 54,088 | 5,922,095 | |
| Whole Foods Market, Inc. | 80,040 | 2,454,827 | |
| 8,376,922 | |||
| TOTAL FOOD AGRICULTURE & FORESTRY | 15,581,291 | ||
| Miscellaneous Environmental - 4.0% | |||
| Other Environmental - 4.0% | |||
| Alphabet, Inc. Class C (b) | 1,650 | 1,358,297 | |
| Apple, Inc. | 10,240 | 1,402,778 | |
| IBM Corp. | 7,645 | 1,374,724 | |
| Johnson & Johnson | 11,510 | 1,406,637 | |
| 5,542,436 | |||
| Pollution Control - 5.5% | |||
| Environmental Testing and Gas Sensing- 1.7% | |||
| PerkinElmer, Inc. | 43,430 | 2,356,512 | |
| Pollution Control Solutions - 3.8% | |||
| Cummins, Inc. | 23,402 | 3,474,963 | |
| Tenneco, Inc. | 27,748 | 1,784,474 | |
| 5,259,437 | |||
| TOTAL POLLUTION CONTROL | 7,615,949 | ||
| Renewable & Alternative Energy - 23.8% | |||
| Biofuels - 0.8% | |||
| Cosan SA Industria e Comercio | 80,410 | 1,018,920 | |
| Other Renewables Equipment - 3.1% | |||
| Andritz AG | 82,252 | 4,296,763 | |
| Renewable Energy Developers and Independent Power Producers - 16.9% | |||
| China Power Intl Development Ltd. | 1,012,910 | 392,747 | |
| Electric Power Development Co. Ltd. | 20,680 | 485,776 | |
| Empresa Nacional de Electricidad SA | 464,430 | 315,689 | |
| Enel Chile Sa | 4,530,752 | 466,136 | |
| Energias de Portugal SA | 256,400 | 792,888 | |
| Enersis SA | 2,651,210 | 515,723 | |
| Enersis SA sponsored | 193,540 | 1,887,015 | |
| ENGIE Brasil Energia SA | 198,410 | 2,330,169 | |
| Graphic Packaging Holding Co. | 197,970 | 2,642,900 | |
| Grupo Acciona SA | 17,280 | 1,293,716 | |
| Hollysys Automation Technologies Ltd. | 56,441 | 985,460 | |
| Iberdrola SA | 703,412 | 4,675,351 | |
| IDACORP, Inc. | 39,134 | 3,245,383 | |
| NHPC Ltd. (b) | 944,530 | 431,745 | |
| PNOC Energy Development Corp. | 3,345,500 | 392,887 | |
| Portland General Electric Co. | 55,891 | 2,533,539 | |
| 23,387,124 | |||
| Solar Energy Generation Equipment - 0.9% | |||
| Advanced Energy Industries, Inc. (b) | 18,750 | 1,164,375 | |
| Wind Power Generation Equipment - 2.1% | |||
| China High Speed Transmission Equipment Group Co. Ltd. | 476,570 | 580,756 | |
| Nordex Se (b) | 9,820 | 144,502 | |
| Vestas Wind Systems A/S | 29,760 | 2,207,555 | |
| 2,932,813 | |||
| TOTAL RENEWABLE & ALTERNATIVE ENERGY | 32,799,995 | ||
| Waste Management & Technologies - 3.8% | |||
| Hazardous Waste Management - 1.4% | |||
| Stericycle, Inc. (b) | 22,390 | 1,855,683 | |
| Recycling and Value Added Waste Processing - 2.4% | |||
| Copart, Inc. (b) | 33,114 | 1,958,362 | |
| Interface, Inc. | 73,653 | 1,392,042 | |
| 3,350,404 | |||
| TOTAL WASTE MANAGEMENT & TECHNOLOGIES | 5,206,087 | ||
| Water Infrastructure & Technologies - 4.7% | |||
| Diversified Water Infrastructure and Technology - 2.5% | |||
| Danaher Corp. | 39,920 | 3,415,156 | |
| Water Infrastructure - 2.2% | |||
| Crane Co. | 42,197 | 3,050,421 | |
| TOTAL WATER INFRASTRUCTURE & TECHNOLOGIES | 6,465,577 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $114,316,937) | 132,395,501 | ||
| Cash Equivalents - 5.8% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 5,958,143 | 5,959,335 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 2,034,593 | 2,035,000 | |
| TOTAL CASH EQUIVALENTS | |||
| (Cost $7,993,729) | 7,994,335 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.0% | |||
| (Cost $122,310,666) | 140,389,836 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.0)% | (2,716,319) | ||
| NET ASSETS - 100% | $137,673,517 |
Legend
(a) Security or a portion of the security is on loan at period end.
(b) Non-income producing
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $16,610 |
| Fidelity Securities Lending Cash Central Fund | 40,267 |
| Total | $56,877 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $132,395,501 | $129,046,412 | $3,349,089 | $-- |
| Money Market Funds | 7,994,335 | 7,994,335 | -- | -- |
| Total Investments in Securities: | $140,389,836 | $137,040,747 | $3,349,089 | $-- |
The following is a summary of transfers between Level 1 and Level 2 for the period ended February 28, 2017. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements:
| Transfers | Total |
| Level 1 to Level 2 | $0 |
| Level 2 to Level 1 | $2,821,069 |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 76.8% |
| Spain | 4.3% |
| Ireland | 3.6% |
| Austria | 3.1% |
| Brazil | 2.5% |
| Chile | 2.3% |
| Bermuda | 2.0% |
| Denmark | 1.6% |
| Others (Individually Less Than 1%) | 3.8% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Environment and Alternative Energy Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $1,977,580) — See accompanying schedule: Unaffiliated issuers (cost $114,316,937) | $132,395,501 | |
| Fidelity Central Funds (cost $7,993,729) | 7,994,335 | |
| Total Investments (cost $122,310,666) | $140,389,836 | |
| Foreign currency held at value (cost $68,340) | 68,340 | |
| Receivable for investments sold | 136,255 | |
| Receivable for fund shares sold | 1,664,417 | |
| Dividends receivable | 267,027 | |
| Distributions receivable from Fidelity Central Funds | 5,821 | |
| Prepaid expenses | 318 | |
| Other receivables | 598 | |
| Total assets | 142,532,612 | |
| Liabilities | ||
| Payable for investments purchased | $2,530,829 | |
| Payable for fund shares redeemed | 150,261 | |
| Accrued management fee | 60,691 | |
| Other affiliated payables | 27,865 | |
| Other payables and accrued expenses | 54,449 | |
| Collateral on securities loaned | 2,035,000 | |
| Total liabilities | 4,859,095 | |
| Net Assets | $137,673,517 | |
| Net Assets consist of: | ||
| Paid in capital | $115,055,429 | |
| Undistributed net investment income | 279,557 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 4,274,138 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 18,064,393 | |
| Net Assets, for 5,763,094 shares outstanding | $137,673,517 | |
| Net Asset Value, offering price and redemption price per share ($137,673,517 ÷ 5,763,094 shares) | $23.89 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $1,798,492 | |
| Income from Fidelity Central Funds | 56,877 | |
| Total income | 1,855,369 | |
| Expenses | ||
| Management fee | $544,231 | |
| Transfer agent fees | 239,357 | |
| Accounting and security lending fees | 39,337 | |
| Custodian fees and expenses | 24,926 | |
| Independent trustees' fees and expenses | 2,116 | |
| Registration fees | 25,468 | |
| Audit | 47,991 | |
| Legal | 2,966 | |
| Miscellaneous | 1,163 | |
| Total expenses before reductions | 927,555 | |
| Expense reductions | (2,774) | 924,781 |
| Net investment income (loss) | 930,588 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 5,958,111 | |
| Fidelity Central Funds | (154) | |
| Foreign currency transactions | (2,299) | |
| Total net realized gain (loss) | 5,955,658 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $12,300) | 21,442,772 | |
| Assets and liabilities in foreign currencies | (937) | |
| Total change in net unrealized appreciation (depreciation) | 21,441,835 | |
| Net gain (loss) | 27,397,493 | |
| Net increase (decrease) in net assets resulting from operations | $28,328,081 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $930,588 | $688,889 |
| Net realized gain (loss) | 5,955,658 | (781,724) |
| Change in net unrealized appreciation (depreciation) | 21,441,835 | (8,882,304) |
| Net increase (decrease) in net assets resulting from operations | 28,328,081 | (8,975,139) |
| Distributions to shareholders from net investment income | (790,016) | (533,726) |
| Distributions to shareholders from net realized gain | (676,548) | (1,831,107) |
| Total distributions | (1,466,564) | (2,364,833) |
| Share transactions | ||
| Proceeds from sales of shares | 66,656,121 | 12,805,231 |
| Reinvestment of distributions | 1,399,954 | 2,254,180 |
| Cost of shares redeemed | (30,686,349) | (18,861,388) |
| Net increase (decrease) in net assets resulting from share transactions | 37,369,726 | (3,801,977) |
| Redemption fees | 10,066 | 1,482 |
| Total increase (decrease) in net assets | 64,241,309 | (15,140,467) |
| Net Assets | ||
| Beginning of period | 73,432,208 | 88,572,675 |
| End of period | $137,673,517 | $73,432,208 |
| Other Information | ||
| Undistributed net investment income end of period | $279,557 | $155,477 |
| Shares | ||
| Sold | 3,101,751 | 657,036 |
| Issued in reinvestment of distributions | 64,231 | 111,117 |
| Redeemed | (1,437,873) | (963,138) |
| Net increase (decrease) | 1,728,109 | (194,985) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Environment and Alternative Energy Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $18.20 | $20.94 | $23.36 | $18.12 | $16.32 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .20 | .17 | .16 | .14 | .18 |
| Net realized and unrealized gain (loss) | 5.78 | (2.34) | .31 | 5.27 | 1.77 |
| Total from investment operations | 5.98 | (2.17) | .47 | 5.41 | 1.95 |
| Distributions from net investment income | (.16) | (.13) | (.14) | (.17) | (.15) |
| Distributions from net realized gain | (.13) | (.44) | (2.75) | – | – |
| Total distributions | (.29) | (.57) | (2.89) | (.17) | (.15) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $23.89 | $18.20 | $20.94 | $23.36 | $18.12 |
| Total ReturnD | 33.02% | (10.63)% | 2.19% | 29.97% | 12.02% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .94% | .95% | .92% | .97% | .99% |
| Expenses net of fee waivers, if any | .94% | .95% | .92% | .97% | .99% |
| Expenses net of all reductions | .94% | .95% | .92% | .97% | .97% |
| Net investment income (loss) | .94% | .86% | .71% | .70% | 1.10% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $137,674 | $73,432 | $88,573 | $102,869 | $82,018 |
| Portfolio turnover rateG | 82% | 20% | 160% | 28% | 54% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Industrial Equipment Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Industrial Equipment Portfolio | 21.11% | 10.45% | 7.88% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Industrial Equipment Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $21,345 | Industrial Equipment Portfolio | |
| $20,834 | S&P 500® Index | |
Industrial Equipment Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Co-Portfolio Manager Janet Glazer: For the year, the fund returned 21.11%, considerably behind the 29.78% gain of the MSCI U.S. IMI Capital Goods 25/50 Index and also trailing the S&P 500®. Versus the MSCI industry index, stock selection was the primary negative factor, especially in the industrial machinery group. Positioning in aerospace & defense also hampered relative results. An overweighting in industrial machinery holding Flowserve proved to be the fund’s largest relative detractor. The company designs, manufactures and markets flow-control products and systems for a variety of markets worldwide. Unfortunately, the fund didn’t own the stock when we took over in April, and by the time we began buying it in June, it was near what turned out to be Flowserve’s high for the period. Also within industrial machinery, overweighting Pentair proved relatively unrewarding. Overweighted exposure to electrical components & equipment provider Acuity Brands further detracted. Additionally, early-cycle favorites such as heavy-equipment manufacturer Caterpillar and heavy-duty truck-engine maker Cummins – both of which I underweighted – delivered above-index performance and therefore hurt our relative results. Conversely, overweighting trading companies & distributors and underweighting industrial conglomerates added a little value. At the stock level, our largest relative contributor was an underweighted position in lagging index heavyweight General Electric. Another positive was water-technology provider Xylem, an overweighted position we established in April that returned about 20% over the reporting period.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Industrial Equipment Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| General Electric Co. | 11.6 | 14.3 |
| AMETEK, Inc. | 5.8 | 4.0 |
| Flowserve Corp. | 5.8 | 3.7 |
| Parker Hannifin Corp. | 5.3 | 2.8 |
| Honeywell International, Inc. | 5.2 | 6.2 |
| HD Supply Holdings, Inc. | 5.1 | 3.0 |
| The Boeing Co. | 4.8 | 1.9 |
| General Dynamics Corp. | 4.7 | 3.7 |
| Pentair PLC | 3.4 | 5.5 |
| Acuity Brands, Inc. | 3.4 | 0.3 |
| 55.1 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Machinery | 30.9% | |
| Aerospace & Defense | 22.3% | |
| Industrial Conglomerates | 20.2% | |
| Electrical Equipment | 14.3% | |
| Trading Companies & Distributors | 8.3% | |
| All Others* | 4.0% | |
| As of August 31, 2016 | ||
| Aerospace & Defense | 27.9% | |
| Machinery | 27.8% | |
| Industrial Conglomerates | 22.4% | |
| Electrical Equipment | 11.9% | |
| Trading Companies & Distributors | 4.1% | |
| All Others* | 5.9% | |
* Includes short-term investments and net other assets (liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Industrial Equipment Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 99.1% | |||
| Shares | Value | ||
| Aerospace & Defense - 22.3% | |||
| Aerospace & Defense - 22.3% | |||
| Astronics Corp. (a) | 8,412 | $281,886 | |
| Elbit Systems Ltd. | 5,300 | 625,400 | |
| General Dynamics Corp. | 45,600 | 8,655,336 | |
| HEICO Corp. Class A | 21,200 | 1,504,140 | |
| Hexcel Corp. | 35,300 | 1,940,794 | |
| Huntington Ingalls Industries, Inc. | 7,100 | 1,551,350 | |
| Lockheed Martin Corp. | 8,000 | 2,132,640 | |
| Northrop Grumman Corp. | 24,300 | 6,004,287 | |
| Raytheon Co. | 27,400 | 4,223,710 | |
| The Boeing Co. | 49,100 | 8,849,293 | |
| TransDigm Group, Inc. | 5,400 | 1,372,680 | |
| United Technologies Corp. | 37,600 | 4,231,880 | |
| 41,373,396 | |||
| Chemicals - 0.0% | |||
| Diversified Chemicals - 0.0% | |||
| AdvanSix, Inc. (a) | 1 | 27 | |
| Commercial Services & Supplies - 1.7% | |||
| Environmental & Facility Services - 1.7% | |||
| Team, Inc. (a) | 89,494 | 3,074,119 | |
| Construction & Engineering - 1.4% | |||
| Construction & Engineering - 1.4% | |||
| AECOM (a) | 34,493 | 1,253,821 | |
| Dycom Industries, Inc. (a) | 8,900 | 731,402 | |
| KBR, Inc. | 42,600 | 641,130 | |
| 2,626,353 | |||
| Electrical Equipment - 14.3% | |||
| Electrical Components & Equipment - 14.3% | |||
| Acuity Brands, Inc. | 29,600 | 6,254,480 | |
| AMETEK, Inc. | 200,900 | 10,842,573 | |
| Eaton Corp. PLC | 74,600 | 5,369,708 | |
| Fortive Corp. | 69,600 | 4,012,440 | |
| 26,479,201 | |||
| Industrial Conglomerates - 20.2% | |||
| Industrial Conglomerates - 20.2% | |||
| 3M Co. | 16,500 | 3,074,775 | |
| General Electric Co. | 723,455 | 21,566,193 | |
| Honeywell International, Inc. | 77,300 | 9,623,850 | |
| Roper Technologies, Inc. | 14,800 | 3,096,160 | |
| 37,360,978 | |||
| Machinery - 30.9% | |||
| Agricultural & Farm Machinery - 2.7% | |||
| AGCO Corp. | 7,163 | 436,370 | |
| Deere & Co. | 41,300 | 4,521,937 | |
| 4,958,307 | |||
| Construction Machinery & Heavy Trucks - 7.6% | |||
| Allison Transmission Holdings, Inc. | 500 | 17,990 | |
| Caterpillar, Inc. | 51,500 | 4,977,990 | |
| Cummins, Inc. | 22,400 | 3,326,176 | |
| PACCAR, Inc. | 14,000 | 935,340 | |
| Wabtec Corp. (b) | 60,800 | 4,871,296 | |
| 14,128,792 | |||
| Industrial Machinery - 20.6% | |||
| Flowserve Corp. | 233,008 | 10,823,222 | |
| IDEX Corp. | 34,600 | 3,189,774 | |
| Parker Hannifin Corp. | 63,100 | 9,770,404 | |
| Pentair PLC | 108,815 | 6,317,799 | |
| Rexnord Corp. (a) | 204,414 | 4,531,858 | |
| SPX Flow, Inc. (a) | 19,400 | 659,600 | |
| Xylem, Inc. | 58,100 | 2,795,772 | |
| 38,088,429 | |||
| TOTAL MACHINERY | 57,175,528 | ||
| Trading Companies & Distributors - 8.3% | |||
| Trading Companies & Distributors - 8.3% | |||
| HD Supply Holdings, Inc. (a) | 221,600 | 9,528,800 | |
| MRC Global, Inc. (a) | 221,500 | 4,476,515 | |
| United Rentals, Inc. (a) | 8,700 | 1,113,861 | |
| Univar, Inc. (a) | 8,950 | 288,190 | |
| 15,407,366 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $158,104,617) | 183,496,968 | ||
| Money Market Funds - 1.6% | |||
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | |||
| (Cost $3,036,925) | 3,036,318 | 3,036,925 | |
| TOTAL INVESTMENT PORTFOLIO - 100.7% | |||
| (Cost $161,141,542) | 186,533,893 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.7)% | (1,378,141) | ||
| NET ASSETS - 100% | $185,155,752 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Investment made with cash collateral received from securities on loan.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $13,548 |
| Fidelity Securities Lending Cash Central Fund | 14,762 |
| Total | $28,310 |
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Industrial Equipment Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $2,940,404) — See accompanying schedule: Unaffiliated issuers (cost $158,104,617) | $183,496,968 | |
| Fidelity Central Funds (cost $3,036,925) | 3,036,925 | |
| Total Investments (cost $161,141,542) | $186,533,893 | |
| Receivable for investments sold | 3,609,061 | |
| Receivable for fund shares sold | 207,167 | |
| Dividends receivable | 444,684 | |
| Distributions receivable from Fidelity Central Funds | 707 | |
| Prepaid expenses | 712 | |
| Other receivables | 989 | |
| Total assets | 190,797,213 | |
| Liabilities | ||
| Payable to custodian bank | $310,214 | |
| Payable for investments purchased | 1,585,161 | |
| Payable for fund shares redeemed | 543,587 | |
| Accrued management fee | 86,076 | |
| Other affiliated payables | 36,038 | |
| Other payables and accrued expenses | 43,460 | |
| Collateral on securities loaned | 3,036,925 | |
| Total liabilities | 5,641,461 | |
| Net Assets | $185,155,752 | |
| Net Assets consist of: | ||
| Paid in capital | $153,714,585 | |
| Undistributed net investment income | 362,649 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 5,686,167 | |
| Net unrealized appreciation (depreciation) on investments | 25,392,351 | |
| Net Assets, for 4,559,408 shares outstanding | $185,155,752 | |
| Net Asset Value, offering price and redemption price per share ($185,155,752 ÷ 4,559,408 shares) | $40.61 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $3,314,488 | |
| Income from Fidelity Central Funds | 28,310 | |
| Total income | 3,342,798 | |
| Expenses | ||
| Management fee | $1,036,018 | |
| Transfer agent fees | 356,186 | |
| Accounting and security lending fees | 73,998 | |
| Custodian fees and expenses | 17,110 | |
| Independent trustees' fees and expenses | 4,096 | |
| Registration fees | 25,270 | |
| Audit | 54,539 | |
| Legal | 3,037 | |
| Interest | 584 | |
| Miscellaneous | 2,183 | |
| Total expenses before reductions | 1,573,021 | |
| Expense reductions | (6,474) | 1,566,547 |
| Net investment income (loss) | 1,776,251 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 18,033,138 | |
| Fidelity Central Funds | 545 | |
| Foreign currency transactions | (2,667) | |
| Total net realized gain (loss) | 18,031,016 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 14,711,560 | |
| Assets and liabilities in foreign currencies | 3,018 | |
| Total change in net unrealized appreciation (depreciation) | 14,714,578 | |
| Net gain (loss) | 32,745,594 | |
| Net increase (decrease) in net assets resulting from operations | $34,521,845 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $1,776,251 | $1,419,020 |
| Net realized gain (loss) | 18,031,016 | 26,572,923 |
| Change in net unrealized appreciation (depreciation) | 14,714,578 | (34,442,394) |
| Net increase (decrease) in net assets resulting from operations | 34,521,845 | (6,450,451) |
| Distributions to shareholders from net investment income | (1,294,923) | (940,848) |
| Distributions to shareholders from net realized gain | (8,371,263) | (10,329,487) |
| Total distributions | (9,666,186) | (11,270,335) |
| Share transactions | ||
| Proceeds from sales of shares | 66,086,044 | 73,896,865 |
| Reinvestment of distributions | 9,433,524 | 11,068,825 |
| Cost of shares redeemed | (72,725,165) | (138,056,936) |
| Net increase (decrease) in net assets resulting from share transactions | 2,794,403 | (53,091,246) |
| Redemption fees | 4,026 | 2,786 |
| Total increase (decrease) in net assets | 27,654,088 | (70,809,246) |
| Net Assets | ||
| Beginning of period | 157,501,664 | 228,310,910 |
| End of period | $185,155,752 | $157,501,664 |
| Other Information | ||
| Undistributed net investment income end of period | $362,649 | $– |
| Shares | ||
| Sold | 1,702,493 | 2,015,473 |
| Issued in reinvestment of distributions | 240,651 | 297,026 |
| Redeemed | (1,851,754) | (3,719,909) |
| Net increase (decrease) | 91,390 | (1,407,410) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Industrial Equipment Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $35.25 | $38.86 | $46.03 | $39.59 | $36.37 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .37 | .33 | .32 | .37 | .45 |
| Net realized and unrealized gain (loss) | 7.00 | (1.87) | .75 | 9.19 | 3.22 |
| Total from investment operations | 7.37 | (1.54) | 1.07 | 9.56 | 3.67 |
| Distributions from net investment income | (.27) | (.19) | (.36) | (.32) | (.45) |
| Distributions from net realized gain | (1.74) | (1.88) | (7.88) | (2.80) | – |
| Total distributions | (2.01) | (2.07) | (8.24) | (3.12) | (.45) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $40.61 | $35.25 | $38.86 | $46.03 | $39.59 |
| Total ReturnD | 21.11% | (4.20)% | 3.36% | 24.37% | 10.19% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .83% | .83% | .77% | .79% | .82% |
| Expenses net of fee waivers, if any | .83% | .83% | .77% | .78% | .82% |
| Expenses net of all reductions | .83% | .82% | .77% | .78% | .81% |
| Net investment income (loss) | .94% | .90% | .76% | .87% | 1.25% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $185,156 | $157,502 | $228,311 | $425,386 | $369,951 |
| Portfolio turnover rateG | 166% | 72%H | 53% | 100% | 69% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Industrials Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Industrials Portfolio | 25.18% | 13.04% | 9.69% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Industrials Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $25,219 | Industrials Portfolio | |
| $20,834 | S&P 500® Index | |
Industrials Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Tobias Welo: For the year, the fund returned 25.18%, trailing the 29.90% gain of the MSCI U.S. IMI Industrials 25/50 Index but edging the broader-market S&P 500®. Versus the MSCI sector index, stock selection in aerospace & defense and industrial machinery weighed on results, as did a modest cash position in a strong up market. In aerospace & defense, most of the damage came from avoiding commercial aircraft maker Boeing, the fund’s largest individual relative detractor this period. The Republican presidential victory lifted hopes that the aerospace cycle might be extended and pushed Boeing shares to a 58% return for the year. Rail carrier Union Pacific was another strong-performing index name we didn’t own that hampered relative results. Additionally, large overweightings in the lagging shares of West, a provider of the technology enabling telephone conference calls, and Ametek, a maker of electronic instruments and motors, also detracted. Conversely, positioning in trading companies & distributors, air freight & logistics, and airlines was helpful. In the second group, avoiding the shares of United Parcel Service – the fund’s top relative contributor – paid off, as this index name advanced 13%, well behind the MSCI index. Overweighting instrumentation maker Teledyne Technologies also was timely, as were larger-than-index stakes in chemicals distributor Univar and construction materials and equipment distributor HD Supply Holdings.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Industrials Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| General Electric Co. | 10.4 | 12.8 |
| Honeywell International, Inc. | 4.8 | 6.1 |
| United Technologies Corp. | 4.8 | 5.6 |
| General Dynamics Corp. | 4.3 | 4.8 |
| Northrop Grumman Corp. | 3.7 | 3.6 |
| Caterpillar, Inc. | 3.6 | 3.3 |
| J.B. Hunt Transport Services, Inc. | 3.2 | 3.8 |
| Southwest Airlines Co. | 2.9 | 2.7 |
| AECOM | 2.9 | 3.9 |
| Norfolk Southern Corp. | 2.7 | 0.0 |
| 43.3 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Aerospace & Defense | 21.2% | |
| Machinery | 17.6% | |
| Industrial Conglomerates | 16.5% | |
| Road & Rail | 9.4% | |
| Electrical Equipment | 7.9% | |
| All Others* | 27.4% | |
| As of August 31, 2016 | ||
| Aerospace & Defense | 32.0% | |
| Machinery | 15.4% | |
| Industrial Conglomerates | 14.0% | |
| Electrical Equipment | 10.8% | |
| Road & Rail | 4.8% | |
| All Others* | 23.0% | |
* Includes short-term investments and net other assets (liabilities).
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Industrials Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 98.3% | |||
| Shares | Value | ||
| Aerospace & Defense - 21.2% | |||
| Aerospace & Defense - 21.2% | |||
| Astronics Corp. (a) | 87,817 | $2,942,748 | |
| Astronics Corp. Class B | 8,732 | 298,896 | |
| Elbit Systems Ltd. | 22,700 | 2,678,600 | |
| General Dynamics Corp. | 230,497 | 43,750,636 | |
| Hexcel Corp. | 265,000 | 14,569,700 | |
| Huntington Ingalls Industries, Inc. | 41,600 | 9,089,600 | |
| Northrop Grumman Corp. | 149,300 | 36,890,537 | |
| Raytheon Co. | 123,900 | 19,099,185 | |
| Rockwell Collins, Inc. | 51,600 | 4,932,444 | |
| Teledyne Technologies, Inc. (a) | 123,221 | 16,192,472 | |
| TransDigm Group, Inc. | 59,800 | 15,201,160 | |
| United Technologies Corp. | 425,271 | 47,864,251 | |
| 213,510,229 | |||
| Airlines - 3.8% | |||
| Airlines - 3.8% | |||
| JetBlue Airways Corp. (a) | 240,700 | 4,804,372 | |
| Southwest Airlines Co. | 504,000 | 29,131,200 | |
| Spirit Airlines, Inc. (a) | 73,300 | 3,826,993 | |
| 37,762,565 | |||
| Building Products - 3.3% | |||
| Building Products - 3.3% | |||
| A.O. Smith Corp. | 228,078 | 11,486,008 | |
| Fortune Brands Home & Security, Inc. | 229,600 | 13,277,768 | |
| Masco Corp. | 261,300 | 8,826,714 | |
| 33,590,490 | |||
| Commercial Services & Supplies - 5.0% | |||
| Diversified Support Services - 2.1% | |||
| Cintas Corp. | 75,800 | 8,945,158 | |
| KAR Auction Services, Inc. | 266,400 | 11,940,048 | |
| 20,885,206 | |||
| Environmental & Facility Services - 1.6% | |||
| Stericycle, Inc. (a) | 88,400 | 7,326,592 | |
| Team, Inc. (a) | 266,700 | 9,161,145 | |
| 16,487,737 | |||
| Office Services & Supplies - 1.3% | |||
| West Corp. | 553,705 | 13,239,087 | |
| TOTAL COMMERCIAL SERVICES & SUPPLIES | 50,612,030 | ||
| Construction & Engineering - 5.6% | |||
| Construction & Engineering - 5.6% | |||
| AECOM (a) | 796,000 | 28,934,600 | |
| Dycom Industries, Inc. (a)(b) | 130,500 | 10,724,490 | |
| Fluor Corp. | 111,500 | 6,175,985 | |
| KBR, Inc. | 691,000 | 10,399,550 | |
| 56,234,625 | |||
| Electrical Equipment - 7.9% | |||
| Electrical Components & Equipment - 7.3% | |||
| Acuity Brands, Inc. | 42,300 | 8,937,990 | |
| AMETEK, Inc. | 467,954 | 25,255,477 | |
| Eaton Corp. PLC | 238,800 | 17,188,824 | |
| Fortive Corp. | 361,310 | 20,829,522 | |
| Regal Beloit Corp. | 22,600 | 1,682,570 | |
| 73,894,383 | |||
| Heavy Electrical Equipment - 0.6% | |||
| TPI Composites, Inc. (b) | 314,857 | 5,494,255 | |
| TOTAL ELECTRICAL EQUIPMENT | 79,388,638 | ||
| Industrial Conglomerates - 16.5% | |||
| Industrial Conglomerates - 16.5% | |||
| General Electric Co. | 3,521,284 | 104,969,474 | |
| Honeywell International, Inc. | 384,859 | 47,914,946 | |
| Roper Technologies, Inc. | 61,100 | 12,782,120 | |
| 165,666,540 | |||
| Machinery - 17.6% | |||
| Construction Machinery & Heavy Trucks - 8.4% | |||
| Allison Transmission Holdings, Inc. | 597,400 | 21,494,452 | |
| Caterpillar, Inc. | 379,600 | 36,692,136 | |
| PACCAR, Inc. | 167,000 | 11,157,270 | |
| Wabtec Corp. | 197,300 | 15,807,676 | |
| 85,151,534 | |||
| Industrial Machinery - 9.2% | |||
| Colfax Corp. (a) | 148,800 | 5,661,840 | |
| Flowserve Corp. | 258,500 | 12,007,325 | |
| IDEX Corp. | 116,598 | 10,749,170 | |
| Ingersoll-Rand PLC | 217,600 | 17,268,736 | |
| Pentair PLC | 142,400 | 8,267,744 | |
| Rexnord Corp. (a) | 577,800 | 12,809,826 | |
| Snap-On, Inc. | 79,800 | 13,539,666 | |
| TriMas Corp. (a) | 547,729 | 12,077,424 | |
| 92,381,731 | |||
| TOTAL MACHINERY | 177,533,265 | ||
| Professional Services - 2.5% | |||
| Human Resource & Employment Services - 1.2% | |||
| Recruit Holdings Co. Ltd. | 54,100 | 2,653,354 | |
| Robert Half International, Inc. | 197,200 | 9,512,928 | |
| 12,166,282 | |||
| Research & Consulting Services - 1.3% | |||
| IHS Markit Ltd. (a) | 318,200 | 12,664,360 | |
| TOTAL PROFESSIONAL SERVICES | 24,830,642 | ||
| Road & Rail - 9.4% | |||
| Railroads - 4.7% | |||
| CSX Corp. | 343,100 | 16,660,936 | |
| Kansas City Southern | 38,800 | 3,438,844 | |
| Norfolk Southern Corp. | 226,600 | 27,425,398 | |
| 47,525,178 | |||
| Trucking - 4.7% | |||
| J.B. Hunt Transport Services, Inc. | 325,120 | 31,917,030 | |
| Old Dominion Freight Lines, Inc. | 130,600 | 11,983,856 | |
| YRC Worldwide, Inc. (a) | 272,000 | 3,492,480 | |
| 47,393,366 | |||
| TOTAL ROAD & RAIL | 94,918,544 | ||
| Trading Companies & Distributors - 5.0% | |||
| Trading Companies & Distributors - 5.0% | |||
| HD Supply Holdings, Inc. (a) | 461,448 | 19,842,264 | |
| MSC Industrial Direct Co., Inc. Class A | 104,600 | 10,521,714 | |
| Univar, Inc. (a) | 398,100 | 12,818,820 | |
| WESCO International, Inc. (a) | 35,900 | 2,495,050 | |
| Wolseley PLC | 78,050 | 4,762,282 | |
| 50,440,130 | |||
| Water Utilities - 0.5% | |||
| Water Utilities - 0.5% | |||
| AquaVenture Holdings Ltd. (b) | 275,700 | 4,549,050 | |
| TOTAL COMMON STOCKS | |||
| (Cost $814,262,382) | 989,036,748 | ||
| Money Market Funds - 1.5% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 12,978,421 | 12,981,017 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 2,800,610 | 2,801,170 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $15,781,982) | 15,782,187 | ||
| TOTAL INVESTMENT PORTFOLIO - 99.8% | |||
| (Cost $830,044,364) | 1,004,818,935 | ||
| NET OTHER ASSETS (LIABILITIES) - 0.2% | 1,601,451 | ||
| NET ASSETS - 100% | $1,006,420,386 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $69,030 |
| Fidelity Securities Lending Cash Central Fund | 12,094 |
| Total | $81,124 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $989,036,748 | $984,274,466 | $4,762,282 | $-- |
| Money Market Funds | 15,782,187 | 15,782,187 | -- | -- |
| Total Investments in Securities: | $1,004,818,935 | $1,000,056,653 | $4,762,282 | $-- |
See accompanying notes which are an integral part of the financial statements.
Industrials Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $2,663,749) — See accompanying schedule: Unaffiliated issuers (cost $814,262,382) | $989,036,748 | |
| Fidelity Central Funds (cost $15,781,982) | 15,782,187 | |
| Total Investments (cost $830,044,364) | $1,004,818,935 | |
| Receivable for investments sold | 6,018,879 | |
| Receivable for fund shares sold | 23,350,524 | |
| Dividends receivable | 1,894,723 | |
| Distributions receivable from Fidelity Central Funds | 9,180 | |
| Prepaid expenses | 4,054 | |
| Other receivables | 54,664 | |
| Total assets | 1,036,150,959 | |
| Liabilities | ||
| Payable for investments purchased | $24,380,571 | |
| Payable for fund shares redeemed | 1,849,972 | |
| Accrued management fee | 442,942 | |
| Other affiliated payables | 169,181 | |
| Other payables and accrued expenses | 85,107 | |
| Collateral on securities loaned | 2,802,800 | |
| Total liabilities | 29,730,573 | |
| Net Assets | $1,006,420,386 | |
| Net Assets consist of: | ||
| Paid in capital | $815,539,606 | |
| Undistributed net investment income | 1,623,010 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 14,483,199 | |
| Net unrealized appreciation (depreciation) on investments | 174,774,571 | |
| Net Assets, for 29,847,646 shares outstanding | $1,006,420,386 | |
| Net Asset Value, offering price and redemption price per share ($1,006,420,386 ÷ 29,847,646 shares) | $33.72 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $16,252,701 | |
| Income from Fidelity Central Funds | 81,124 | |
| Total income | 16,333,825 | |
| Expenses | ||
| Management fee | $5,615,170 | |
| Transfer agent fees | 1,758,716 | |
| Accounting and security lending fees | 339,454 | |
| Custodian fees and expenses | 25,745 | |
| Independent trustees' fees and expenses | 22,449 | |
| Registration fees | 62,294 | |
| Audit | 47,217 | |
| Legal | 15,446 | |
| Interest | 932 | |
| Miscellaneous | 14,494 | |
| Total expenses before reductions | 7,901,917 | |
| Expense reductions | (43,715) | 7,858,202 |
| Net investment income (loss) | 8,475,623 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 67,945,303 | |
| Redemption in-kind with affiliated entities | 45,579,937 | |
| Fidelity Central Funds | (1,664) | |
| Foreign currency transactions | (6,083) | |
| Total net realized gain (loss) | 113,517,493 | |
| Change in net unrealized appreciation (depreciation) on investment securities | 81,799,219 | |
| Net gain (loss) | 195,316,712 | |
| Net increase (decrease) in net assets resulting from operations | $203,792,335 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $8,475,623 | $8,794,775 |
| Net realized gain (loss) | 113,517,493 | 55,150,171 |
| Change in net unrealized appreciation (depreciation) | 81,799,219 | (166,730,410) |
| Net increase (decrease) in net assets resulting from operations | 203,792,335 | (102,785,464) |
| Distributions to shareholders from net investment income | (5,098,193) | (7,361,744) |
| Distributions to shareholders from net realized gain | (33,247,891) | (62,174,193) |
| Total distributions | (38,346,084) | (69,535,937) |
| Share transactions | ||
| Proceeds from sales of shares | 405,686,354 | 273,540,425 |
| Reinvestment of distributions | 37,026,695 | 67,847,745 |
| Cost of shares redeemed | (580,294,997) | (333,211,627) |
| Net increase (decrease) in net assets resulting from share transactions | (137,581,948) | 8,176,543 |
| Redemption fees | 6,151 | 5,989 |
| Total increase (decrease) in net assets | 27,870,454 | (164,138,869) |
| Net Assets | ||
| Beginning of period | 978,549,932 | 1,142,688,801 |
| End of period | $1,006,420,386 | $978,549,932 |
| Other Information | ||
| Undistributed net investment income end of period | $1,623,010 | $– |
| Distributions in excess of net investment income end of period | $– | $(27,494) |
| Shares | ||
| Sold | 12,627,592 | 8,694,986 |
| Issued in reinvestment of distributions | 1,142,094 | 2,328,702 |
| Redeemed | (18,750,051) | (11,147,316) |
| Net increase (decrease) | (4,980,365) | (123,628) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Industrials Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $28.10 | $32.69 | $33.69 | $28.04 | $24.69 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .26 | .24 | .22 | .23 | .28 |
| Net realized and unrealized gain (loss) | 6.76 | (2.90) | 2.44 | 7.36 | 3.54 |
| Total from investment operations | 7.02 | (2.66) | 2.66 | 7.59 | 3.82 |
| Distributions from net investment income | (.19) | (.20) | (.23) | (.20) | (.26) |
| Distributions from net realized gain | (1.21) | (1.73) | (3.43) | (1.74) | (.21) |
| Total distributions | (1.40) | (1.93) | (3.66) | (1.94) | (.47) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $33.72 | $28.10 | $32.69 | $33.69 | $28.04 |
| Total ReturnD | 25.18% | (8.29)% | 8.74% | 27.80% | 15.71% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .77% | .77% | .78% | .81% | .85% |
| Expenses net of fee waivers, if any | .77% | .76% | .78% | .81% | .85% |
| Expenses net of all reductions | .77% | .76% | .78% | .81% | .84% |
| Net investment income (loss) | .83% | .79% | .68% | .74% | 1.13% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,006,420 | $978,550 | $1,142,689 | $1,217,117 | $873,266 |
| Portfolio turnover rateG | 62%H | 75%H | 72%H | 58% | 75% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Transportation Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Transportation Portfolio | 29.40% | 16.85% | 10.22% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Transportation Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $26,465 | Transportation Portfolio | |
| $20,834 | S&P 500® Index | |
Transportation Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Matthew Moulis: For the year, the fund returned 29.40%, trailing the 31.41% gain of the MSCI U.S. IMI Transportation 25/50 Index but outpacing the S&P 500®. Versus the MSCI industry index, the drag from a modest cash position and a sizable overweighting in the lagging airlines group in the first half of the period hampered performance. The fund’s three largest relative detractors were airline stocks, although this group also included some of our top contributors. United Continental Holdings was the biggest relative detractor. We began the period with a significant position here, and I reduced it as the period progressed, selling out completely by the end of October. In doing so, I missed the late-period rally in this stock. Stakes in JetBlue Airways and Spirit Airlines also detracted, as did Matson, a company supplying ocean-freight transportation and logistics services, mainly between Hawaii and the U.S. mainland. Conversely, stock picking in railroads helped versus the MSCI index. Here, the primary boost came from CSX, which benefited from the prospect of a massive increase in federal spending on infrastructure projects. In addition, CSX’s shares got a big lift in January, when the firm announced that it was in talks to bring aboard highly respected industry veteran Hunter Harrison as CEO. With that said, our largest relative contributor was American Airlines Group, where I added value by significantly increasing our overweighting in the aftermath of the U.K.’s late-June vote to leave the European Union.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Transportation Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| United Parcel Service, Inc. Class B | 14.5 | 13.8 |
| Union Pacific Corp. | 11.6 | 12.8 |
| FedEx Corp. | 9.4 | 9.7 |
| CSX Corp. | 8.1 | 5.7 |
| American Airlines Group, Inc. | 6.5 | 7.2 |
| Norfolk Southern Corp. | 4.9 | 4.9 |
| Delta Air Lines, Inc. | 4.7 | 4.5 |
| Genesee & Wyoming, Inc. Class A | 4.4 | 1.9 |
| Expeditors International of Washington, Inc. | 4.2 | 0.5 |
| Alaska Air Group, Inc. | 4.0 | 1.5 |
| 72.3 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Road & Rail | 38.6% | |
| Air Freight & Logistics | 30.6% | |
| Airlines | 25.7% | |
| Machinery | 1.4% | |
| Transportation Infrastructure | 0.6% | |
| All Others* | 3.1% | |
| As of August 31, 2016 | ||
| Road & Rail | 38.5% | |
| Air Freight & Logistics | 26.7% | |
| Airlines | 24.5% | |
| Transportation Infrastructure | 2.0% | |
| Auto Components | 1.2% | |
| All Others* | 7.1% | |
* Includes short-term investments and net other assets (liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Transportation Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 97.7% | |||
| Shares | Value | ||
| Air Freight & Logistics - 30.6% | |||
| Air Freight & Logistics - 30.6% | |||
| Air Transport Services Group, Inc. (a) | 232,000 | $3,948,640 | |
| Atlas Air Worldwide Holdings, Inc. (a) | 23,500 | 1,335,975 | |
| C.H. Robinson Worldwide, Inc. | 23,596 | 1,896,411 | |
| Expeditors International of Washington, Inc. | 475,200 | 26,791,776 | |
| FedEx Corp. | 313,200 | 60,441,336 | |
| Forward Air Corp. | 95,244 | 4,719,340 | |
| Park-Ohio Holdings Corp. | 52,070 | 2,324,926 | |
| United Parcel Service, Inc. Class B | 883,800 | 93,470,686 | |
| XPO Logistics, Inc. (a) | 37,800 | 1,927,422 | |
| 196,856,512 | |||
| Airlines - 25.7% | |||
| Airlines - 25.7% | |||
| Alaska Air Group, Inc. | 262,800 | 25,707,096 | |
| Allegiant Travel Co. | 15,800 | 2,750,780 | |
| American Airlines Group, Inc. | 895,400 | 41,510,744 | |
| Delta Air Lines, Inc. | 607,402 | 30,327,582 | |
| Hawaiian Holdings, Inc. (a) | 121,000 | 5,886,650 | |
| JetBlue Airways Corp. (a) | 983,400 | 19,628,664 | |
| SkyWest, Inc. | 388,200 | 13,645,230 | |
| Southwest Airlines Co. | 371,000 | 21,443,800 | |
| Spirit Airlines, Inc. (a) | 84,959 | 4,435,709 | |
| 165,336,255 | |||
| Auto Components - 0.2% | |||
| Auto Parts & Equipment - 0.2% | |||
| Hertz Global Holdings, Inc. (a) | 44,800 | 1,017,856 | |
| Internet Software & Services - 0.3% | |||
| Internet Software & Services - 0.3% | |||
| Stamps.com, Inc. (a) | 15,000 | 1,891,500 | |
| Machinery - 1.4% | |||
| Construction Machinery & Heavy Trucks - 0.7% | |||
| Allison Transmission Holdings, Inc. | 122,300 | 4,400,354 | |
| Industrial Machinery - 0.7% | |||
| Global Brass & Copper Holdings, Inc. | 47,500 | 1,598,375 | |
| TriMas Corp. (a) | 147,100 | 3,243,555 | |
| 4,841,930 | |||
| TOTAL MACHINERY | 9,242,284 | ||
| Marine - 0.3% | |||
| Marine - 0.3% | |||
| Kirby Corp. (a) | 14,300 | 989,560 | |
| Matson, Inc. | 20,300 | 688,779 | |
| 1,678,339 | |||
| Road & Rail - 38.6% | |||
| Railroads - 30.5% | |||
| CSX Corp. | 1,073,519 | 52,130,083 | |
| Genesee& Wyoming, Inc. Class A (a) | 379,600 | 28,143,544 | |
| Kansas City Southern | 106,600 | 9,447,958 | |
| Norfolk Southern Corp. | 260,600 | 31,540,418 | |
| Union Pacific Corp. | 691,995 | 74,693,940 | |
| 195,955,943 | |||
| Trucking - 8.1% | |||
| AMERCO | 2,800 | 1,081,640 | |
| Avis Budget Group, Inc. (a) | 197,800 | 6,839,924 | |
| Celadon Group, Inc. (b) | 150,100 | 1,208,305 | |
| J.B. Hunt Transport Services, Inc. | 182,200 | 17,886,574 | |
| Landstar System, Inc. | 49,200 | 4,270,560 | |
| Marten Transport Ltd. | 133,600 | 3,279,880 | |
| Roadrunner Transportation Systems, Inc. (a) | 108,900 | 821,106 | |
| Ryder System, Inc. | 50,800 | 3,868,420 | |
| Saia, Inc. (a) | 125,588 | 6,072,180 | |
| Swift Transporation Co. (a) | 28,500 | 619,020 | |
| Universal Logistics Holdings I | 85,090 | 1,161,479 | |
| YRC Worldwide, Inc. (a) | 388,300 | 4,985,772 | |
| 52,094,860 | |||
| TOTAL ROAD & RAIL | 248,050,803 | ||
| Transportation Infrastructure - 0.6% | |||
| Airport Services - 0.6% | |||
| Macquarie Infrastructure Co. LLC | 52,600 | 4,047,044 | |
| TOTAL COMMON STOCKS | |||
| (Cost $458,139,204) | 628,120,593 | ||
| Money Market Funds - 1.4% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 7,945,393 | 7,946,983 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 984,178 | 984,375 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $8,929,902) | 8,931,358 | ||
| TOTAL INVESTMENT PORTFOLIO - 99.1% | |||
| (Cost $467,069,106) | 637,051,951 | ||
| NET OTHER ASSETS (LIABILITIES) - 0.9% | 6,015,352 | ||
| NET ASSETS - 100% | $643,067,303 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $74,227 |
| Fidelity Securities Lending Cash Central Fund | 7,870 |
| Total | $82,097 |
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Transportation Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $905,625) — See accompanying schedule: Unaffiliated issuers (cost $458,139,204) | $628,120,593 | |
| Fidelity Central Funds (cost $8,929,902) | 8,931,358 | |
| Total Investments (cost $467,069,106) | $637,051,951 | |
| Receivable for investments sold | 10,401,822 | |
| Receivable for fund shares sold | 735,433 | |
| Dividends receivable | 1,786,918 | |
| Distributions receivable from Fidelity Central Funds | 8,553 | |
| Prepaid expenses | 1,474 | |
| Other receivables | 4,862 | |
| Total assets | 649,991,013 | |
| Liabilities | ||
| Payable for fund shares redeemed | $5,478,767 | |
| Accrued management fee | 298,624 | |
| Other affiliated payables | 125,463 | |
| Other payables and accrued expenses | 36,481 | |
| Collateral on securities loaned | 984,375 | |
| Total liabilities | 6,923,710 | |
| Net Assets | $643,067,303 | |
| Net Assets consist of: | ||
| Paid in capital | $470,687,209 | |
| Undistributed net investment income | 885,200 | |
| Accumulated undistributed net realized gain (loss) on investments | 1,512,049 | |
| Net unrealized appreciation (depreciation) on investments | 169,982,845 | |
| Net Assets, for 6,916,368 shares outstanding | $643,067,303 | |
| Net Asset Value, offering price and redemption price per share ($643,067,303 ÷ 6,916,368 shares) | $92.98 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $7,317,042 | |
| Income from Fidelity Central Funds | 82,097 | |
| Total income | 7,399,139 | |
| Expenses | ||
| Management fee | $2,579,286 | |
| Transfer agent fees | 991,273 | |
| Accounting and security lending fees | 180,070 | |
| Custodian fees and expenses | 15,037 | |
| Independent trustees' fees and expenses | 10,002 | |
| Registration fees | 56,782 | |
| Audit | 47,250 | |
| Legal | 6,108 | |
| Miscellaneous | 6,508 | |
| Total expenses before reductions | 3,892,316 | |
| Expense reductions | (54,161) | 3,838,155 |
| Net investment income (loss) | 3,560,984 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 25,776,664 | |
| Fidelity Central Funds | 345 | |
| Total net realized gain (loss) | 25,777,009 | |
| Change in net unrealized appreciation (depreciation) on investment securities | 86,525,869 | |
| Net gain (loss) | 112,302,878 | |
| Net increase (decrease) in net assets resulting from operations | $115,863,862 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $3,560,984 | $3,655,932 |
| Net realized gain (loss) | 25,777,009 | 18,954,502 |
| Change in net unrealized appreciation (depreciation) | 86,525,869 | (151,446,381) |
| Net increase (decrease) in net assets resulting from operations | 115,863,862 | (128,835,947) |
| Distributions to shareholders from net investment income | (2,471,329) | (3,339,075) |
| Distributions to shareholders from net realized gain | (9,022,622) | (30,400,241) |
| Total distributions | (11,493,951) | (33,739,316) |
| Share transactions | ||
| Proceeds from sales of shares | 345,780,616 | 110,642,037 |
| Reinvestment of distributions | 11,028,020 | 32,315,777 |
| Cost of shares redeemed | (226,311,294) | (718,863,775) |
| Net increase (decrease) in net assets resulting from share transactions | 130,497,342 | (575,905,961) |
| Redemption fees | 29,312 | 18,511 |
| Total increase (decrease) in net assets | 234,896,565 | (738,462,713) |
| Net Assets | ||
| Beginning of period | 408,170,738 | 1,146,633,451 |
| End of period | $643,067,303 | $408,170,738 |
| Other Information | ||
| Undistributed net investment income end of period | $885,200 | $– |
| Shares | ||
| Sold | 3,926,788 | 1,313,508 |
| Issued in reinvestment of distributions | 120,921 | 432,669 |
| Redeemed | (2,703,847) | (8,366,334) |
| Net increase (decrease) | 1,343,862 | (6,620,157) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Transportation Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $73.25 | $94.04 | $76.28 | $57.75 | $53.02 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .63 | .50 | .46 | .45 | .51 |
| Net realized and unrealized gain (loss) | 20.86 | (15.81) | 19.67 | 20.44 | 7.59 |
| Total from investment operations | 21.49 | (15.31) | 20.13 | 20.89 | 8.10 |
| Distributions from net investment income | (.38) | (.52) | (.34) | (.27) | (.41) |
| Distributions from net realized gain | (1.39) | (4.95) | (2.04) | (2.09) | (2.96) |
| Total distributions | (1.77) | (5.48)C | (2.38) | (2.36) | (3.37) |
| Redemption fees added to paid in capitalB | .01 | –D | .01 | –D | –D |
| Net asset value, end of period | $92.98 | $73.25 | $94.04 | $76.28 | $57.75 |
| Total ReturnE | 29.40% | (16.28)% | 26.80% | 36.60% | 16.10% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .83% | .81% | .81% | .85% | .89% |
| Expenses net of fee waivers, if any | .83% | .81% | .81% | .85% | .89% |
| Expenses net of all reductions | .82% | .80% | .81% | .84% | .86% |
| Net investment income (loss) | .76% | .60% | .53% | .68% | .98% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $643,067 | $408,171 | $1,146,633 | $450,237 | $212,956 |
| Portfolio turnover rateH | 104% | 80% | 72%I | 78% | 47% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $5.48 per share is comprised of distributions from net investment income of $.521 and distributions from net realized gain of $4.954 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2017
1. Organization.
Air Transportation Portfolio, Defense and Aerospace Portfolio, Environment and Alternative Energy Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, and Transportation Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the Trust). The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Share transactions on the Statement of Changes in Net Assets may contain exchanges between affiliated funds.
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, as an investment of each Fund, but do not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of each Fund's investments to the Fair Value Committee (the Committee) established by each Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, each Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees each Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing each Fund's investments and ratifies the fair value determinations of the Committee.
Each Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 28, 2017, including information on transfers between Levels 1 and 2, is included at the end of each applicable Fund's Schedule of Investments.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Funds represent a return of capital or capital gain. The Funds determine the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. Large, non-recurring dividends recognized by the Fund are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for Defense and Aerospace Portfolio and Industrials Portfolio, independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2017, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. Each Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, certain foreign taxes, redemptions in kind, deferred trustees compensation, losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) on securities | |
| Air Transportation Portfolio | $308,353,203 | $97,238,000 | $(3,118,297) | $94,119,703 |
| Defense and Aerospace Portfolio | 1,178,541,834 | 446,198,140 | (6,746,579) | 439,451,561 |
| Environment and Alternative Energy Portfolio | 122,518,021 | 18,648,904 | (777,089) | 17,871,815 |
| Industrial Equipment Portfolio | 161,595,761 | 26,805,009 | (1,866,877) | 24,938,132 |
| Industrials Portfolio | 831,569,314 | 183,643,144 | (10,393,523) | 173,249,621 |
| Transportation Portfolio | 469,781,216 | 175,420,354 | (8,149,619) | 167,270,735 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed ordinary income | Undistributed long-term capital gain | Net unrealized appreciation (depreciation) on securities and other investments | |
| Air Transportation Portfolio | $1,111,891 | $3,750,495 | $94,119,496 |
| Defense and Aerospace Portfolio | 3,914,380 | 7,312,164 | 439,451,561 |
| Environment and Alternative Energy Portfolio | 1,028,862 | 3,732,293 | 17,869,338 |
| Industrial Equipment Portfolio | 3,404,551 | 3,098,485 | 24,938,132 |
| Industrials Portfolio | 1,672,123 | 16,008,150 | 173,249,621 |
| Transportation Portfolio | 885,200 | 4,224,158 | 167,270,735 |
The tax character of distributions paid was as follows:
| February 28, 2017 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Air Transportation Portfolio | $1,185,421 | $1,110,453 | $2,295,874 |
| Defense and Aerospace Portfolio | 15,056,809 | 50,623,462 | 65,680,271 |
| Environment and Alternative Energy Portfolio | 790,016 | 676,548 | 1,466,564 |
| Industrial Equipment Portfolio | 1,810,003 | 7,856,183 | 9,666,186 |
| Industrials Portfolio | 5,098,193 | 33,247,891 | 38,346,084 |
| Transportation Portfolio | 2,471,329 | 9,022,622 | 11,493,951 |
| February 29, 2016 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Air Transportation Portfolio | $4,357,629 | $28,815,510 | $33,173,139 |
| Defense and Aerospace Portfolio | 7,997,911 | 49,261,334 | 57,259,245 |
| Environment and Alternative Energy Portfolio | 533,726 | 1,831,107 | 2,364,833 |
| Industrial Equipment Portfolio | 940,848 | 10,329,487 | 11,270,335 |
| Industrials Portfolio | 7,361,744 | 62,174,193 | 69,535,937 |
| Transportation Portfolio | 3,339,075 | 30,400,241 | 33,739,316 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital. In November 2016, the Board of Trustees approved the elimination of these redemption fees for Defense and Aerospace Portfolio and Industrials Portfolio effective December 12, 2016.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, are noted in the table below.
| Purchases ($) | Sales ($) | |
| Air Transportation Portfolio | 335,341,777 | 337,052,914 |
| Defense and Aerospace Portfolio | 605,885,666 | 262,616,393 |
| Environment and Alternative Energy Portfolio | 112,363,151 | 78,550,050 |
| Industrial Equipment Portfolio | 305,571,398 | 309,418,175 |
| Industrials Portfolio | 654,756,089 | 625,710,591 |
| Transportation Portfolio | 598,207,953 | 476,160,319 |
Prior Fiscal Year Redemptions In-Kind. During the prior period, 2,554,993 shares of the Industrial Equipment Portfolio held by an unaffiliated entity were redeemed for investments and cash with a value of $96,042,190. The Fund had a net realized gain of $25,749,250 on investments delivered through in-kind redemptions. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. The Industrial Equipment Portfolio recognized no gain or loss for federal income tax purposes.
Prior Fiscal Year Exchanges In-Kind. During the prior period, investments and cash received in-kind through subscriptions totaled $96,022,017 in exchange for 2,963,642 shares of the Industrials Portfolio. The amount of in-kind exchanges is included in share transactions in the accompanying Statement of Changes in Net Assets. The Industrials Portfolio recognized no gain or loss for federal income tax purposes.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total | |
| Air Transportation Portfolio | .30% | .25% | .55% |
| Defense and Aerospace Portfolio | .30% | .25% | .55% |
| Environment and Alternative Energy Portfolio | .30% | .25% | .55% |
| Industrial Equipment Portfolio | .30% | .25% | .55% |
| Industrials Portfolio | .30% | .25% | .55% |
| Transportation Portfolio | .30% | .25% | .55% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
| Air Transportation Portfolio | .23% |
| Defense and Aerospace Portfolio | .19% |
| Environment and Alternative Energy Portfolio | .24% |
| Industrial Equipment Portfolio | .19% |
| Industrials Portfolio | .17% |
| Transportation Portfolio | .21% |
Accounting and Security Lending Fees. FSC maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Air Transportation Portfolio | $12,537 |
| Defense and Aerospace Portfolio | 13,914 |
| Environment and Alternative Energy Portfolio | 2,596 |
| Industrial Equipment Portfolio | 5,704 |
| Industrials Portfolio | 18,639 |
| Transportation Portfolio | 21,806 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company (FMR) or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Industrial Equipment Portfolio | Borrower | $5,001,400 | .84% | $584 |
| Industrials Portfolio | Borrower | $3,165,111 | .59% | $932 |
Interfund Trades. The Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Redemptions In-Kind. During the period, 6,790,326 shares of Industrials Portfolio held by an affiliated entity were redeemed in-kind for investments and cash with a value of $203,573,978. The net realized gain of $45,579,937 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. Industrials Portfolio recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
| Air Transportation Portfolio | $950 |
| Defense and Aerospace Portfolio | 3,159 |
| Environment and Alternative Energy Portfolio | 276 |
| Industrial Equipment Portfolio | 560 |
| Industrials Portfolio | 3,118 |
| Transportation Portfolio | 1,297 |
During the period, the Funds did not borrow on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. The Funds or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Funds may apply collateral received from the borrower against the obligation. The Funds may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. Security lending activity was as follows:
| Total Security Lending Income | |
| Air Transportation Portfolio | $29,223 |
| Defense and Aerospace Portfolio | 11,857 |
| Environment and Alternative Energy Portfolio | 40,267 |
| Industrial Equipment Portfolio | 14,762 |
| Industrials Portfolio | 12,094 |
| Transportation Portfolio | 7,870 |
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of Certain Funds include an amount in addition to trade execution, which may be rebated back to the Funds to offset certain expenses. In addition, through arrangements with each applicable Fund's custodian, credits realized as a result of certain uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage Service reduction | Custody expense reduction | |
| Air Transportation Portfolio | $32,388 | $166 |
| Defense and Aerospace Portfolio | 21,792 | 652 |
| Environment and Alternative Energy Portfolio | 1,849 | 43 |
| Industrial Equipment Portfolio | 4,888 | – |
| Industrials Portfolio | 35,076 | – |
| Transportation Portfolio | 49,517 | 80 |
In addition, during the period the investment adviser reimbursed and/or waived a portion of operating expenses as follows:
| Amount | |
| Air Transportation Portfolio | $3,079 |
| Defense and Aerospace Portfolio | 10,594 |
| Environment and Alternative Energy Portfolio | 882 |
| Industrial Equipment Portfolio | 1,586 |
| Industrials Portfolio | 8,639 |
| Transportation Portfolio | 4,564 |
9. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, the following mutual funds managed by the investment adviser or its affiliates were the owners of record of 10% or more of the total outstanding shares of the following Funds.
| VIP FundsManager 50% Portfolio | VIP FundsManager 60% Portfolio | |
| Industrial Equipment Portfolio | 20% | 26% |
| Industrials Portfolio | –% | 12% |
Mutual funds managed by the investment adviser or its affiliates, in aggregate, were the owners of record of more than 20% of the total outstanding shares of the following Funds.
| Fund | % of shares held |
| Industrial Equipment Portfolio | 56% |
| Industrials Portfolio | 25% |
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Air Transportation Portfolio, Defense and Aerospace Portfolio, Environment and Alternative Energy Portfolio, Industrial Equipment Portfolio, Industrials Portfolio and Transportation Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Air Transportation Portfolio, Defense and Aerospace Portfolio, Environment and Alternative Energy Portfolio, Industrial Equipment Portfolio, Industrials Portfolio and Transportation Portfolio (each a fund of Fidelity Select Portfolios) (the"Funds") as of February 28, 2017, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of February 28, 2017 by correspondence with the custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 18, 2017
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 90 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the funds is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Each fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
* Determined to be an "Interested Trustee" by virtue of, among other things, his or her affiliation with the trust or various entities under common control with SelectCo.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed the oil refining, drilling and marketing of petroleum products (including specialty petroleum products), recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present) and serves as its President and CEO. Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006. Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Trustee or Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006), and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue serves as a Member (2012-present) and Co-Chairman (2016-present) of the Board of Directors of United Way of New York, Member of the Board of Directors of NYC Leadership Academy (2012-present) and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services), Treasurer of United Way of New York (2012-2016), and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Carol B. Tomé (1957)
Year of Election or Appointment: 2017
Member of the Advisory Board
Ms. Tomé also serves as Trustee or Member of the Advisory Board of other Fidelity® funds. Ms. Tomé is Chief Financial Officer (2001-present) and Executive Vice President of Corporate Services (2007-present) of The Home Depot, Inc. (home improvement retailer) and a Director (2003-present) and Chair of the Audit Committee (2004-present) of United Parcel Service, Inc. (package delivery and supply chain management). Previously, Ms. Tomé served as Senior Vice President of Finance and Accounting/Treasurer (2000-2007) and Vice President and Treasurer (1995-2000) of The Home Depot, Inc. and Chair of the Board (2010-2012), Vice Chair of the Board (2009 and 2013), and a Director (2008-2013) of the Federal Reserve Bank of Atlanta. Ms. Tomé is also a director or trustee of many community and professional organizations.
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Interim Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (UK) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
Jeffrey S. Christian (1961)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Christian also serves as Assistant Treasurer of other funds. Mr. Christian is an employee of Fidelity Investments (2003-present).
William C. Coffey (1969)
Year of Election or Appointment: 2009
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Senior Vice President of Fidelity Management & Research Company (FMR) (investment adviser firm, 2016), Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of FMR (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
Colm A. Hogan (1973)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan is an employee of Fidelity Investments (2005-present). Mr. Colm A. Hogan is not related to Mr. Brian B. Hogan.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche (accounting firm, 2005-2013).
Renee Stagnone (1975)
Year of Election or Appointment: 2016
Assistant Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2016 to February 28, 2017).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio-A | Beginning Account Value September 1, 2016 | Ending Account Value February 28, 2017 | Expenses Paid During Period-B September 1, 2016 to February 28, 2017 | |
| Air Transportation Portfolio | .84% | |||
| Actual | $1,000.00 | $1,205.10 | $4.59 | |
| Hypothetical-C | $1,000.00 | $1,020.63 | $4.21 | |
| Defense and Aerospace Portfolio | .79% | |||
| Actual | $1,000.00 | $1,164.60 | $4.24 | |
| Hypothetical-C | $1,000.00 | $1,020.88 | $3.96 | |
| Environment and Alternative Energy Portfolio | .91% | |||
| Actual | $1,000.00 | $1,138.10 | $4.82 | |
| Hypothetical-C | $1,000.00 | $1,020.28 | $4.56 | |
| Industrial Equipment Portfolio | .83% | |||
| Actual | $1,000.00 | $1,071.50 | $4.26 | |
| Hypothetical-C | $1,000.00 | $1,020.68 | $4.16 | |
| Industrials Portfolio | .78% | |||
| Actual | $1,000.00 | $1,112.80 | $4.09 | |
| Hypothetical-C | $1,000.00 | $1,020.93 | $3.91 | |
| Transportation Portfolio | .82% | |||
| Actual | $1,000.00 | $1,194.10 | $4.46 | |
| Hypothetical-C | $1,000.00 | $1,020.73 | $4.11 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains | |
| Air Transportation Portfolio | 04/13/17 | 04/12/17 | $0.067 | $0.892 |
| Defense and Aerospace Portfolio | 04/13/17 | 04/12/17 | $0.111 | $0.832 |
| Environment and Alternative Energy Portfolio | 04/13/17 | 04/12/17 | $0.045 | $0.721 |
| Industrial Equipment Portfolio | 04/13/17 | 04/12/17 | $0.086 | $1.444 |
| Industrials Portfolio | 04/13/17 | 04/12/17 | $0.059 | $0.565 |
| Transportation Portfolio | 04/13/17 | 04/12/17 | $0.141 | $0.673 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2017, or, if subsequently determined to be different, the net capital gain of such year.
| Air Transportation Portfolio | $4,860,948 |
| Defense and Aerospace Portfolio | $53,430,114 |
| Environment and Alternative Energy Portfolio | $4,408,841 |
| Industrial Equipment Portfolio | $10,954,667 |
| Industrials Portfolio | $65,730,605 |
| Transportation Portfolio | $14,222,438 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 2016 | December 2016 | |
| Air Transportation Portfolio | – | 100% |
| Defense and Aerospace Portfolio | 100% | 100% |
| Environment and Alternative Energy Portfolio | 100% | 100% |
| Industrial Equipment Portfolio | – | 100% |
| Industrials Portfolio | – | 100% |
| Transportation Portfolio | – | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| April 2016 | December 2016 | |
| Air Transportation Portfolio | – | 100% |
| Defense and Aerospace Portfolio | 100% | 100% |
| Environment and Alternative Energy Portfolio | 100% | 100% |
| Industrial Equipment Portfolio | – | 100% |
| Industrials Portfolio | – | 100% |
| Transportation Portfolio | – | 100% |
The funds will notify shareholders in January 2018 of amounts for use in preparing 2017 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Air Transportation Portfolio
Defense and Aerospace Portfolio
Environment and Alternative Energy Portfolio
Industrial Equipment Portfolio
Industrials Portfolio
Transportation Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. SelectCo and the sub-advisers are collectively referred to herein as the Investment Advisers. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2017 meeting, the Board unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of the Investment Advisers as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the investment personnel compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the Investment Advisers' investment staffs, including their size, education, experience, and resources, as well as Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board considered that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, compliance, and technology and operations capabilities and resources, which are integral parts of the investment management process.Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians, subcustodians, and pricing vendors; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs; (iv) broadening eligibility requirements for certain lower-priced share classes of, and streamlining the fee structure for, certain existing equity index funds; (v) lowering expense caps for certain existing funds and classes to reduce expenses paid by shareholders; (vi) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vii) rationalizing product lines and gaining increased efficiencies through fund mergers and share class consolidations; (viii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (ix) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; and (x) accelerating the conversion of all remaining Class B shares to Class A shares, which have a lower expense structure.Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.The Board took into account discussions with representatives of SelectCo about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Each of Defense and Aerospace Portfolio, Environment and Alternative Energy Portfolio, Industrials Portfolio and Industrial Equipment Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2016, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address each such fund's performance.In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing fund share classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors, including the following: general market conditions; issuer-specific information; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2016.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should continue to benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Air Transportation Portfolio
Defense and Aerospace Portfolio
Environment and Alternative Energy Portfolio
Industrial Equipment Portfolio
Industrials Portfolio
Transportation Portfolio
SELCI-ANN-0417
1.813657.112
Fidelity® Select Portfolios® Telecommunications Portfolio Wireless Portfolio Annual Report February 28, 2017 |
|
Contents
Telecommunications Portfolio | |
Wireless Portfolio | |
Board Approval of Investment Advisory Contracts and Management Fees |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2017 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Funds. This report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Funds nor Fidelity Distributors Corporation is a bank.
Telecommunications Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Telecommunications Portfolio | 19.06% | 12.24% | 5.73% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Telecommunications Portfolio, a class of the fund, on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $17,456 | Telecommunications Portfolio | |
| $20,834 | S&P 500® Index | |
Telecommunications Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Matthew Drukker: For the year, the fund’s share classes (excluding sales charges, if applicable), outpaced the 13.77% result of the MSCI U.S. IMI Telecommunication Services 25/50 Index by roughly 4 to 5 percentage points. Nonetheless, the fund fell short of the broad-based S&P 500, as telecom stocks cooled off mid-period. Stock selection among specialized real estate investment trusts (REITs), cable & satellite, and wireless telecommunication services all helped performance versus the index. The fund’s biggest relative contribution came from largely avoiding wireless provider NII Holdings, which recently had emerged from bankruptcy. The fund’s sizable position in American Tower, a large owner/operator of wireless communication towers, also was beneficial. American Tower exhibited sustainable growth as wireless providers have continued to invest in broadband access to remain competitive. On the downside, choices among integrated telecommunication services names hindered the fund’s relative results. An underweighting in pre-paid calling card provider and strong-performing index component IDT was the fund's most significant detractor. We sold the position in IDT by period end.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Telecommunications Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Verizon Communications, Inc. | 19.3 | 14.5 |
| AT&T, Inc. | 15.2 | 22.5 |
| T-Mobile U.S., Inc. | 8.1 | 5.8 |
| SBA Communications Corp. Class A | 5.4 | 5.4 |
| Level 3 Communications, Inc. | 4.6 | 4.5 |
| CenturyLink, Inc. | 3.5 | 2.8 |
| American Tower Corp. | 2.9 | 2.6 |
| Cogent Communications Group, Inc. | 2.5 | 2.4 |
| Lumos Networks Corp. | 2.5 | 2.4 |
| Iridium Communications, Inc. | 2.4 | 1.3 |
| 66.4 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Diversified Telecommunication Services | 68.1% | |
| Wireless Telecommunication Services | 15.5% | |
| Media | 8.7% | |
| Equity Real Estate Investment Trusts (Reits) | 3.8% | |
| Semiconductors & Semiconductor Equipment | 1.2% | |
| All Others* | 2.7% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Diversified Telecommunication Services | 71.7% | |
| Wireless Telecommunication Services | 16.0% | |
| Media | 8.3% | |
| Real Estate Investment Trusts | 2.6% | |
| Internet Software & Services | 0.8% | |
| All Others* | 0.6% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Telecommunications Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 99.8% | |||
| Shares | Value | ||
| Commercial Services & Supplies - 0.4% | |||
| Office Services & Supplies - 0.4% | |||
| West Corp. | 136,100 | $3,254,151 | |
| Diversified Telecommunication Services - 68.1% | |||
| Alternative Carriers - 16.3% | |||
| Cogent Communications Group, Inc. | 465,268 | 19,285,359 | |
| Globalstar, Inc. (a)(b) | 3,620,022 | 4,959,430 | |
| Iliad SA | 26,408 | 5,468,033 | |
| Iridium Communications, Inc. (a)(b) | 2,107,430 | 18,334,641 | |
| Level 3 Communications, Inc. (a) | 614,367 | 35,172,511 | |
| Lumos Networks Corp. (a) | 1,071,878 | 18,982,959 | |
| Vonage Holdings Corp. (a) | 1,978,071 | 11,907,987 | |
| Zayo Group Holdings, Inc. (a) | 303,900 | 9,578,928 | |
| 123,689,848 | |||
| Integrated Telecommunication Services - 51.8% | |||
| AT&T, Inc. | 2,751,620 | 114,990,200 | |
| Atlantic Tele-Network, Inc. | 183,300 | 12,535,887 | |
| CenturyLink, Inc. (b) | 1,098,978 | 26,661,206 | |
| Cincinnati Bell, Inc. (a) | 414,502 | 7,999,889 | |
| Consolidated Communications Holdings, Inc. (b) | 167,898 | 3,786,100 | |
| FairPoint Communications, Inc. (a) | 313,500 | 4,968,975 | |
| Frontier Communications Corp. (b) | 5,088,034 | 14,907,940 | |
| General Communications, Inc. Class A (a) | 501,693 | 10,109,114 | |
| SBA Communications Corp. Class A (a) | 355,556 | 41,162,718 | |
| Verizon Communications, Inc. | 2,950,397 | 146,428,204 | |
| Windstream Holdings, Inc. (b) | 1,139,309 | 8,510,638 | |
| 392,060,871 | |||
| TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 515,750,719 | ||
| Equity Real Estate Investment Trusts (REITs) - 3.8% | |||
| Specialized REITs - 3.8% | |||
| American Tower Corp. | 192,990 | 22,153,322 | |
| Communications Sales & Leasing, Inc. | 228,000 | 6,605,160 | |
| 28,758,482 | |||
| Internet & Direct Marketing Retail - 0.5% | |||
| Internet & Direct Marketing Retail - 0.5% | |||
| Liberty Interactive Corp. QVC Group Series A (a) | 200,800 | 3,791,104 | |
| Internet Software & Services - 1.0% | |||
| Internet Software & Services - 1.0% | |||
| Gogo, Inc. (a)(b) | 734,247 | 7,783,018 | |
| Media - 8.7% | |||
| Broadcasting - 0.5% | |||
| Nexstar Broadcasting Group, Inc. Class A | 57,900 | 3,992,205 | |
| Cable & Satellite - 6.5% | |||
| Altice NV Class A (a) | 483,479 | 10,195,294 | |
| Charter Communications, Inc. Class A (a) | 43,375 | 14,012,728 | |
| Comcast Corp. Class A | 183,800 | 6,877,796 | |
| Liberty Global PLC: | |||
| Class C (a) | 400,336 | 14,047,790 | |
| LiLAC Class C (a) | 91,034 | 2,238,526 | |
| Megacable Holdings S.A.B. de CV unit | 568,000 | 2,044,534 | |
| 49,416,668 | |||
| Movies & Entertainment - 1.7% | |||
| The Walt Disney Co. | 57,000 | 6,275,130 | |
| Time Warner, Inc. | 64,900 | 6,373,829 | |
| 12,648,959 | |||
| TOTAL MEDIA | 66,057,832 | ||
| Semiconductors & Semiconductor Equipment - 1.2% | |||
| Semiconductors - 1.2% | |||
| Broadcom Ltd. | 21,500 | 4,534,995 | |
| Qorvo, Inc. (a) | 65,500 | 4,329,550 | |
| 8,864,545 | |||
| Technology Hardware, Storage & Peripherals - 0.6% | |||
| Technology Hardware, Storage & Peripherals - 0.6% | |||
| Apple, Inc. | 32,600 | 4,465,874 | |
| Wireless Telecommunication Services - 15.5% | |||
| Wireless Telecommunication Services - 15.5% | |||
| Millicom International Cellular SA | 37,800 | 2,059,155 | |
| NII Holdings, Inc. (a) | 1,400,383 | 2,800,766 | |
| Shenandoah Telecommunications Co. | 242,467 | 6,813,323 | |
| Sprint Corp. (a)(b) | 1,494,485 | 13,166,413 | |
| T-Mobile U.S., Inc. (a) | 986,297 | 61,673,151 | |
| Telephone & Data Systems, Inc. | 611,964 | 16,541,387 | |
| U.S. Cellular Corp. (a) | 378,700 | 14,159,593 | |
| 117,213,788 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $624,698,166) | 755,939,513 | ||
| Money Market Funds - 10.8% | |||
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | |||
| (Cost $82,165,145) | 82,159,370 | 82,175,802 | |
| TOTAL INVESTMENT PORTFOLIO - 110.6% | |||
| (Cost $706,863,311) | 838,115,315 | ||
| NET OTHER ASSETS (LIABILITIES) - (10.6)% | (80,417,476) | ||
| NET ASSETS - 100% | $757,697,839 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $48,378 |
| Fidelity Securities Lending Cash Central Fund | 964,047 |
| Total | $1,012,425 |
Other Affiliated Issuers
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:
| Affiliate | Value, beginning of period | Purchases | Sales Proceeds* | Dividend Income | Value, end of period |
| Lumos Networks Corp. | $11,351,399 | $12,670,357 | $12,902,055 | $-- | $-- |
| Total | $11,351,399 | $12,670,357 | $12,902,055 | $-- | $-- |
* Includes the value of securities delivered through in-kind transactions.
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $75,668,187) — See accompanying schedule: Unaffiliated issuers (cost $624,698,166) | $755,939,513 | |
| Fidelity Central Funds (cost $82,165,145) | 82,175,802 | |
| Total Investments (cost $706,863,311) | $838,115,315 | |
| Receivable for investments sold | 7,109,419 | |
| Receivable for fund shares sold | 832,296 | |
| Dividends receivable | 165,679 | |
| Distributions receivable from Fidelity Central Funds | 136,834 | |
| Prepaid expenses | 3,753 | |
| Other receivables | 42,229 | |
| Total assets | 846,405,525 | |
| Liabilities | ||
| Payable to custodian bank | $15,840 | |
| Payable for fund shares redeemed | 4,473,657 | |
| Accrued management fee | 356,658 | |
| Distribution and service plan fees payable | 20,931 | |
| Notes payable to affiliates | 1,473,000 | |
| Other affiliated payables | 145,554 | |
| Other payables and accrued expenses | 64,383 | |
| Collateral on securities loaned | 82,157,663 | |
| Total liabilities | 88,707,686 | |
| Net Assets | $757,697,839 | |
| Net Assets consist of: | ||
| Paid in capital | $617,696,989 | |
| Undistributed net investment income | 2,151,795 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 6,600,480 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 131,248,575 | |
| Net Assets | $757,697,839 | |
| Calculation of Maximum Offering Price | ||
| Class A: | ||
| Net Asset Value and redemption price per share ($31,966,150 ÷ 459,218 shares) | $69.61 | |
| Maximum offering price per share (100/94.25 of $69.61) | $73.86 | |
| Class T: | ||
| Net Asset Value and redemption price per share ($6,933,398 ÷ 100,007 shares) | $69.33 | |
| Maximum offering price per share (100/96.50 of $69.33) | $71.84 | |
| Class C: | ||
| Net Asset Value and offering price per share ($13,528,403 ÷ 195,378 shares)(a) | $69.24 | |
| Telecommunications: | ||
| Net Asset Value, offering price and redemption price per share ($690,720,164 ÷ 9,872,032 shares) | $69.97 | |
| Class I: | ||
| Net Asset Value, offering price and redemption price per share ($14,549,724 ÷ 208,394 shares) | $69.82 |
(a) Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $19,894,128 | |
| Interest | 145,002 | |
| Income from Fidelity Central Funds | 1,012,425 | |
| Total income | 21,051,555 | |
| Expenses | ||
| Management fee | $4,796,107 | |
| Transfer agent fees | 1,622,285 | |
| Distribution and service plan fees | 236,281 | |
| Accounting and security lending fees | 311,791 | |
| Custodian fees and expenses | 64,856 | |
| Independent trustees' fees and expenses | 19,001 | |
| Registration fees | 135,131 | |
| Audit | 60,150 | |
| Legal | 11,369 | |
| Interest | 7,680 | |
| Miscellaneous | 9,681 | |
| Total expenses before reductions | 7,274,332 | |
| Expense reductions | (159,988) | 7,114,344 |
| Net investment income (loss) | 13,937,211 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 47,209,205 | |
| Redemptions in-kind with affiliated entities (including gain from Other affiliated issuers of $349,270) | 12,655,696 | |
| Fidelity Central Funds | 7,139 | |
| Other affiliated issuers | 1,672,544 | |
| Foreign currency transactions | (11,742) | |
| Total net realized gain (loss) | 61,532,842 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 57,549,433 | |
| Assets and liabilities in foreign currencies | 124 | |
| Total change in net unrealized appreciation (depreciation) | 57,549,557 | |
| Net gain (loss) | 119,082,399 | |
| Net increase (decrease) in net assets resulting from operations | $133,019,610 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $13,937,211 | $7,986,783 |
| Net realized gain (loss) | 61,532,842 | (87,999) |
| Change in net unrealized appreciation (depreciation) | 57,549,557 | 9,807,560 |
| Net increase (decrease) in net assets resulting from operations | 133,019,610 | 17,706,344 |
| Distributions to shareholders from net investment income | (13,294,404) | (6,674,056) |
| Distributions to shareholders from net realized gain | (31,675,318) | (4,168,398) |
| Total distributions | (44,969,722) | (10,842,454) |
| Share transactions - net increase (decrease) | (55,515,132) | 345,924,755 |
| Redemption fees | 54,102 | 10,972 |
| Total increase (decrease) in net assets | 32,588,858 | 352,799,617 |
| Net Assets | ||
| Beginning of period | 725,108,981 | 372,309,364 |
| End of period | $757,697,839 | $725,108,981 |
| Other Information | ||
| Undistributed net investment income end of period | $2,151,795 | $1,545,938 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Telecommunications Portfolio Class A
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $62.32 | $63.26 | $58.71 | $51.58 | $46.12 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .88 | .81 | .76 | 1.76C | .99 |
| Net realized and unrealized gain (loss) | 10.68 | (.76)D | 5.83 | 6.48 | 5.43 |
| Total from investment operations | 11.56 | .05 | 6.59 | 8.24 | 6.42 |
| Distributions from net investment income | (1.11) | (.54) | (2.04) | (1.11) | (.96) |
| Distributions from net realized gain | (3.16) | (.45) | – | (.01) | – |
| Total distributions | (4.27) | (.99) | (2.04) | (1.11)E | (.96) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $69.61 | $62.32 | $63.26 | $58.71 | $51.58 |
| Total ReturnG,H | 18.65% | .16% | 11.54% | 16.00% | 13.97% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | 1.14% | 1.15% | 1.15% | 1.18% | 1.18% |
| Expenses net of fee waivers, if any | 1.14% | 1.15% | 1.15% | 1.18% | 1.18% |
| Expenses net of all reductions | 1.12% | 1.15% | 1.15% | 1.15% | 1.17% |
| Net investment income (loss) | 1.28% | 1.33% | 1.26% | 3.08%C | 2.01% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $31,966 | $13,032 | $11,052 | $7,712 | $6,449 |
| Portfolio turnover rateK | 105%L | 51% | 94%L | 111% | 76% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.95 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.43%.
D The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
E Total distributions of $1.11 per share is comprised of distributions from net investment income of $1.106 and distributions from net realized gain of $.005 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Total returns do not include the effect of the sales charges.
I Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
L Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Telecommunications Portfolio Class T
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $61.95 | $63.04 | $58.50 | $51.41 | $46.01 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .65 | .61 | .57 | 1.59C | .85 |
| Net realized and unrealized gain (loss) | 10.62 | (.76)D | 5.81 | 6.44 | 5.39 |
| Total from investment operations | 11.27 | (.15) | 6.38 | 8.03 | 6.24 |
| Distributions from net investment income | (.73) | (.49) | (1.84) | (.94) | (.84) |
| Distributions from net realized gain | (3.16) | (.45) | – | (.01) | – |
| Total distributions | (3.89) | (.94) | (1.84) | (.94)E | (.84) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $69.33 | $61.95 | $63.04 | $58.50 | $51.41 |
| Total ReturnG,H | 18.26% | (.16)% | 11.19% | 15.64% | 13.61% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | 1.46% | 1.47% | 1.47% | 1.48% | 1.48% |
| Expenses net of fee waivers, if any | 1.46% | 1.47% | 1.47% | 1.48% | 1.48% |
| Expenses net of all reductions | 1.44% | 1.46% | 1.46% | 1.45% | 1.46% |
| Net investment income (loss) | .96% | 1.01% | .94% | 2.78%C | 1.72% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $6,933 | $8,280 | $5,095 | $4,344 | $4,237 |
| Portfolio turnover rateK | 105%L | 51% | 94%L | 111% | 76% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.94 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.13%.
D The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
E Total distributions of $.94 per share is comprised of distributions from net investment income of $.939 and distributions from net realized gain of $.005 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Total returns do not include the effect of the sales charges.
I Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
L Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Telecommunications Portfolio Class C
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $62.10 | $63.04 | $58.54 | $51.47 | $46.02 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .37 | .36 | .34 | 1.36C | .63 |
| Net realized and unrealized gain (loss) | 10.62 | (.75)D | 5.80 | 6.46 | 5.41 |
| Total from investment operations | 10.99 | (.39) | 6.14 | 7.82 | 6.04 |
| Distributions from net investment income | (.69) | (.10) | (1.64) | (.74) | (.59) |
| Distributions from net realized gain | (3.16) | (.45) | – | (.01) | – |
| Total distributions | (3.85) | (.55) | (1.64) | (.75) | (.59) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $69.24 | $62.10 | $63.04 | $58.54 | $51.47 |
| Total ReturnF,G | 17.77% | (.57)% | 10.75% | 15.20% | 13.14% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | 1.88% | 1.89% | 1.85% | 1.88% | 1.90% |
| Expenses net of fee waivers, if any | 1.88% | 1.89% | 1.85% | 1.88% | 1.90% |
| Expenses net of all reductions | 1.86% | 1.88% | 1.85% | 1.85% | 1.89% |
| Net investment income (loss) | .54% | .60% | .56% | 2.38%C | 1.29% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $13,528 | $7,735 | $7,074 | $5,523 | $4,353 |
| Portfolio turnover rateJ | 105%K | 51% | 94%K | 111% | 76% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.94 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .73%.
D The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Total returns do not include the effect of the contingent deferred sales charge.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Telecommunications Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $62.58 | $63.54 | $58.94 | $51.75 | $46.26 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.12 | 1.02 | .96 | 1.96C | 1.15 |
| Net realized and unrealized gain (loss) | 10.74 | (.77)D | 5.85 | 6.51 | 5.43 |
| Total from investment operations | 11.86 | .25 | 6.81 | 8.47 | 6.58 |
| Distributions from net investment income | (1.31) | (.76) | (2.21) | (1.28) | (1.09) |
| Distributions from net realized gain | (3.16) | (.45) | – | (.01) | – |
| Total distributions | (4.47) | (1.21) | (2.21) | (1.28)E | (1.09) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $69.97 | $62.58 | $63.54 | $58.94 | $51.75 |
| Total ReturnG | 19.06% | .49% | 11.90% | 16.40% | 14.30% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .80% | .82% | .83% | .85% | .87% |
| Expenses net of fee waivers, if any | .80% | .81% | .83% | .85% | .87% |
| Expenses net of all reductions | .78% | .81% | .82% | .82% | .85% |
| Net investment income (loss) | 1.62% | 1.67% | 1.58% | 3.41%C | 2.33% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $690,720 | $689,600 | $346,174 | $343,548 | $377,841 |
| Portfolio turnover rateJ | 105%K | 51% | 94%K | 111% | 76% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.95 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.76%.
D The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
E Total distributions of $1.28 per share is comprised of distributions from net investment income of $1.275 and distributions from net realized gain of $.005 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Telecommunications Portfolio Class I
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $62.46 | $63.38 | $58.80 | $51.65 | $46.20 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.12 | 1.02 | .94 | 1.93C | 1.17 |
| Net realized and unrealized gain (loss) | 10.70 | (.76)D | 5.83 | 6.48 | 5.42 |
| Total from investment operations | 11.82 | .26 | 6.77 | 8.41 | 6.59 |
| Distributions from net investment income | (1.30) | (.73) | (2.19) | (1.25) | (1.14) |
| Distributions from net realized gain | (3.16) | (.45) | – | (.01) | – |
| Total distributions | (4.46) | (1.18) | (2.19) | (1.26) | (1.14) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $69.82 | $62.46 | $63.38 | $58.80 | $51.65 |
| Total ReturnF | 19.03% | .51% | 11.85% | 16.30% | 14.33% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .80% | .82% | .86% | .91% | .85% |
| Expenses net of fee waivers, if any | .80% | .82% | .86% | .91% | .85% |
| Expenses net of all reductions | .78% | .81% | .85% | .88% | .83% |
| Net investment income (loss) | 1.62% | 1.67% | 1.55% | 3.35%C | 2.35% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $14,550 | $6,197 | $2,505 | $1,604 | $2,641 |
| Portfolio turnover rateI | 105%J | 51% | 94%J | 111% | 76% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.95 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.70%.
D The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the class during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the class.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2017
1. Organization.
Telecommunications Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries. The Fund offers Class A, Class T, Class C, Telecommunications and Class I shares, each of which has equal rights as to assets and voting privileges. Each class has exclusive voting rights with respect to matters that affect that class.
After the close of business on June 24, 2016, all outstanding Class B shares were converted to Class A shares. All current fiscal period dollar and share amounts for Class B presented in the Notes to Financial Statements are for the period March 1, 2016 through June 24, 2016.
In March 2017, the Board of Trustees approved a change in the name of Class T to Class M effective after the close of business on March 24, 2017.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Fund represent a return of capital or capital gain. The Fund determines the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of the Fund, and certain fund-level expense reductions, if any, are allocated daily on a pro-rata basis to each class based on the relative net assets of each class to the total net assets of the Fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred. Certain expense reductions may also differ by class. For the reporting period, the allocated portion of income and expenses to each class as a percent of its average net assets may vary due to the timing of recording these transactions in relation to fluctuating net assets of the classes. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2017, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income dividends and capital gain distributions are declared separately for each class. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, redemptions in kind, deferred trustees compensation and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $144,418,791 |
| Gross unrealized depreciation | (20,292,166) |
| Net unrealized appreciation (depreciation) on securities | $124,126,625 |
| Tax Cost | $713,988,690 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $2,726,551 |
| Undistributed long-term capital gain | $13,151,561 |
| Net unrealized appreciation (depreciation) on securities and other investments | $124,123,196 |
The tax character of distributions paid was as follows:
| February 28, 2017 | February 29, 2016 | |
| Ordinary Income | $33,284,559 | $ 7,554,050 |
| Long-term Capital Gains | 11,685,163 | 3,288,404 |
| Total | $44,969,722 | $ 10,842,454 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital. In November 2016, the Board of Trustees approved the elimination of these redemption fees effective December 12, 2016.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, aggregated $900,357,820 and $922,943,190, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, the Fund has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Corporation (FDC), an affiliate of the investment adviser, separate Distribution and Service Fees, each of which is based on an annual percentage of each class' average net assets. In addition, FDC may pay financial intermediaries for selling shares of the Fund and providing shareholder support services. For the period, the Distribution and Service Fee rates, total fees and amounts retained by FDC were as follows:
| Distribution Fee | Service Fee | Total Fees | Retained by FDC | |
| Class A | -% | .25% | $76,395 | $– |
| Class T | .25% | .25% | 39,876 | – |
| Class B | .75% | .25% | 731 | 550 |
| Class C | .75% | .25% | 119,279 | 32,166 |
| $236,281 | $32,716 |
Sales Load. FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class T shares, some of which is paid to financial intermediaries for selling shares of the Fund. Depending on the holding period, FDC may receive contingent deferred sales charges levied on Class A, Class T, Class B, and Class C redemptions. The deferred sales charges range from 5.00% to 1.00% for Class B shares, 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class T shares.
For the period, sales charge amounts retained by FDC were as follows:
| Retained by FDC | |
| Class A | $37,482 |
| Class T | 3,694 |
| Class B(a) | 1 |
| Class C(a) | 2,967 |
| $44,144 |
(a) When Class B and Class C shares are initially sold, FDC pays commissions from its own resources to financial intermediaries through which the sales are made.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc., (FIIOC), an affiliate of the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class of the Fund. FIIOC receives account fees and asset-based fees that vary according to the account size and type of account of the shareholders of the respective classes of the Fund. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements.
For the period, transfer agent fees for each class were as follows:
| Amount | % of Class-Level Average Net Assets | |
| Class A | $81,938 | .27 |
| Class T | 27,593 | .35 |
| Class B | 182 | .25 |
| Class C | 30,773 | .26 |
| Telecommunications | 1,454,952 | .18 |
| Class I | 26,847 | .19 |
| $1,622,285 |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $47,168 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. Any open loans, including accrued interest, at period end are presented under the caption "Notes payable to affiliates" in the Fund's Statement of Assets and Liabilities. The Fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense |
| Borrower | $7,053,902 | .63% | $6,254 |
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Redemptions In-Kind. During the period, 805,095 shares of the Fund held by an affiliated entity were redeemed in-kind for investments and cash with a value of $53,345,591. The net realized gain of $12,655,696 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets as well as Note 11: Share Transactions. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $2,591 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $964,047.
8. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average loan balance during the period for which loans were outstanding amounted to $11,409,800. The weighted average interest rate was .90%. The interest expense amounted to $1,426 under the bank borrowing program. At period end, there were no bank borrowings outstanding.
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $154,305 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of the fund-level operating expenses in the amount of $5,683.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| From net investment income | ||
| Class A | $455,173 | $101,836 |
| Class T | 67,280 | 64,003 |
| Class B | – | 172 |
| Class C | 124,522 | 12,147 |
| Telecommunications | 12,452,745 | 6,462,442 |
| Class I | 194,684 | 33,456 |
| Total | $13,294,404 | $6,674,056 |
| From net realized gain | ||
| Class A | $1,308,078 | $85,263 |
| Class T | 287,783 | 59,140 |
| Class B | – | 2,151 |
| Class C | 572,522 | 53,589 |
| Telecommunications | 29,029,256 | 3,948,074 |
| Class I | 477,679 | 20,181 |
| Total | $31,675,318 | $4,168,398 |
11. Share Transactions.
Share transactions for each class were as follows and may contain automatic conversions between classes or exchanges between affiliated funds:
| Shares | Shares | Dollars | Dollars | |
| Year ended February 28, 2017 | Year ended February 29, 2016 | Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Class A | ||||
| Shares sold | 521,786 | 91,221 | $35,388,038 | $5,573,645 |
| Reinvestment of distributions | 24,324 | 3,029 | 1,671,796 | 178,902 |
| Shares redeemed | (296,004) | (59,841) | (20,518,786) | (3,630,540) |
| Net increase (decrease) | 250,106 | 34,409 | $16,541,048 | $2,122,007 |
| Class T | ||||
| Shares sold | 82,122 | 70,704 | $5,468,018 | $4,245,232 |
| Reinvestment of distributions | 5,039 | 2,087 | 345,400 | 122,479 |
| Shares redeemed | (120,797) | (19,976) | (8,187,323) | (1,205,139) |
| Net increase (decrease) | (33,636) | 52,815 | $(2,373,905) | $3,162,572 |
| Class B | ||||
| Shares sold | 975 | 129 | $64,042 | $7,453 |
| Reinvestment of distributions | – | 39 | – | 2,323 |
| Shares redeemed | (5,216) | (2,377) | (349,278) | (146,261) |
| Net increase (decrease) | (4,241) | (2,209) | $(285,236) | $(136,485) |
| Class C | ||||
| Shares sold | 135,768 | 48,243 | $9,283,679 | $2,966,823 |
| Reinvestment of distributions | 8,829 | 861 | 604,885 | 50,662 |
| Shares redeemed | (73,776) | (36,747) | (5,085,863) | (2,199,789) |
| Net increase (decrease) | 70,821 | 12,357 | $4,802,701 | $817,696 |
| Telecommunications | ||||
| Shares sold | 6,206,062 | 6,996,236 | $424,943,213 | $423,896,658 |
| Reinvestment of distributions | 578,869 | 169,238 | 39,940,628 | 10,035,177 |
| Shares redeemed | (7,931,924)(a) | (1,594,679) | (546,713,599)(a) | (97,516,561) |
| Net increase (decrease) | (1,146,993) | 5,570,795 | $(81,829,758) | $336,415,274 |
| Class I | ||||
| Shares sold | 536,498 | 91,633 | $37,085,732 | $5,507,038 |
| Reinvestment of distributions | 8,128 | 779 | 559,963 | 46,233 |
| Shares redeemed | (435,454) | (32,720) | (30,015,677) | (2,009,580) |
| Net increase (decrease) | 109,172 | 59,692 | $7,630,018 | $3,543,691 |
(a) Amount includes in-kind redemptions (see Note 5: Redemptions In-Kind).
12. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
At the end of the period, Fidelity VIP FundsManager 60% Portfolio was the owner of record of approximately 12% of the total outstanding shares of the Fund. Mutual funds managed by the investment adviser or its affiliates were the owners of record, in the aggregate, of approximately 26% of the total outstanding shares of the Fund.
Wireless Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Wireless Portfolio | 24.09% | 10.90% | 7.35% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Wireless Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $20,322 | Wireless Portfolio | |
| $20,834 | S&P 500® Index | |
Wireless Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Matthew Drukker: For the year, the fund gained 24.09%, significantly besting the 15.77% result of the S&P Custom Wireless Index, but falling short of the S&P 500. Stock picks, and to a greater degree, sector allocation bolstered performance versus the industry benchmark, led by the technology hardware, storage & peripherals segment. Here, the fund benefited from its sizable position in consumer technology giant Apple. Shares of Apple rallied toward the end of last summer, buoyed by announcements the iPhone® 7, and continued to rally through period end, aided by strong product sales. Elsewhere, our stock picking in cable & satellite proved additive, led by an out-of-index stake in Altice, a Netherlands-based cable company. Conversely, stock picking in integrated telecommunication services detracted on a relative basis. However, the fund’s biggest individual detractor was the fund’s less-than-index stake in strong-performing ARM Holdings, a designer of microprocessors and other technological intellectual property.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Notes to Shareholders: On October 12, 2016, Matthew Drukker became Lead Portfolio Manager of the fund, succeeding Harlan Carere, who served as Co-Portfolio Manager until December 30, 2016.Due to new international benchmark guidelines, S&P® Dow Jones® Indices has decided to stop offering its brand on custom benchmarks, effective March 31, 2017. As a temporary solution, on April 1, 2017, the fund’s industry benchmark name will change from the S&P® Custom Wireless Index to the Fidelity Wireless Index. S&P® has agreed to continue calculating the benchmark until a suitable alternative is found.
Wireless Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Apple, Inc. | 24.6 | 24.7 |
| T-Mobile U.S., Inc. | 7.0 | 2.7 |
| American Tower Corp. | 6.4 | 7.0 |
| Verizon Communications, Inc. | 5.8 | 1.1 |
| Qualcomm, Inc. | 4.8 | 5.0 |
| Vodafone Group PLC sponsored ADR | 3.7 | 7.6 |
| BT Group PLC sponsored ADR | 2.4 | 3.5 |
| SFR Group SA | 2.2 | 1.0 |
| Orange SA | 2.1 | 2.3 |
| Masmovil Ibercom SA | 2.0 | 0.1 |
| 61.0 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Diversified Telecommunication Services | 29.0% | |
| Technology Hardware, Storage & Peripherals | 25.8% | |
| Wireless Telecommunication Services | 14.7% | |
| Semiconductors & Semiconductor Equipment | 8.9% | |
| Equity Real Estate Investment Trusts (Reits) | 6.4% | |
| All Others* | 15.2% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Diversified Telecommunication Services | 26.5% | |
| Technology Hardware, Storage & Peripherals | 24.7% | |
| Wireless Telecommunication Services | 14.9% | |
| Semiconductors & Semiconductor Equipment | 13.3% | |
| Real Estate Investment Trusts | 7.0% | |
| All Others* | 13.6% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Wireless Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 95.4% | |||
| Shares | Value | ||
| Communications Equipment - 4.1% | |||
| Communications Equipment - 4.1% | |||
| CommScope Holding Co., Inc. (a) | 40,500 | $1,541,025 | |
| Harris Corp. | 18,100 | 1,989,190 | |
| Motorola Solutions, Inc. | 11,568 | 913,525 | |
| NETGEAR, Inc. (a) | 25,700 | 1,408,360 | |
| Nokia Corp. sponsored ADR | 129,000 | 663,060 | |
| Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 2,000 | 12,900 | |
| Telit Communications PLC (b) | 952,300 | 3,379,552 | |
| ViaSat, Inc. (a) | 1 | 69 | |
| 9,907,681 | |||
| Diversified Telecommunication Services - 27.7% | |||
| Alternative Carriers - 1.6% | |||
| Iliad SA | 17,156 | 3,552,317 | |
| ORBCOMM, Inc. (a) | 37,000 | 317,090 | |
| 3,869,407 | |||
| Integrated Telecommunication Services - 26.1% | |||
| AT&T, Inc. | 72,300 | 3,021,417 | |
| BCE, Inc. | 82,700 | 3,607,618 | |
| BT Group PLC | 39,400 | 159,218 | |
| BT Group PLC sponsored ADR (b) | 286,700 | 5,814,276 | |
| Cellnex Telecom Sau | 110,600 | 1,665,566 | |
| Chunghwa Telecom Co. Ltd. sponsored ADR | 42,900 | 1,410,123 | |
| Deutsche Telekom AG | 112,500 | 1,942,575 | |
| Euskaltel, S.A. | 243,800 | 2,305,939 | |
| Masmovil Ibercom SA (a)(b) | 147,786 | 4,853,499 | |
| Nippon Telegraph & Telephone Corp. sponsored ADR | 62,300 | 2,637,782 | |
| Orange SA | 339,900 | 5,121,446 | |
| SBA Communications Corp. Class A (a) | 25,100 | 2,905,827 | |
| SFR Group SA (a) | 178,100 | 5,188,676 | |
| TDC A/S | 305,298 | 1,642,910 | |
| Telecom Italia SpA (a) | 2,531,700 | 2,043,116 | |
| Telecom Italia SpA sponsored ADR (a)(b) | 25,400 | 203,962 | |
| Telefonica Deutschland Holding AG | 830,188 | 3,644,653 | |
| Telefonica SA sponsored ADR | 16,597 | 168,128 | |
| Verizon Communications, Inc. | 277,901 | 13,792,227 | |
| Zegona Communications PLC | 133,795 | 191,753 | |
| 62,320,711 | |||
| TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 66,190,118 | ||
| Equity Real Estate Investment Trusts (REITs) - 6.4% | |||
| Specialized REITs - 6.4% | |||
| American Tower Corp. | 134,492 | 15,438,337 | |
| Crown Castle International Corp. | 1 | 94 | |
| 15,438,431 | |||
| Internet Software & Services - 2.1% | |||
| Internet Software & Services - 2.1% | |||
| Alphabet, Inc. Class C (a) | 2,452 | 2,018,511 | |
| Facebook, Inc. Class A (a) | 7,500 | 1,016,550 | |
| Wix.com Ltd. (a) | 31,200 | 1,943,760 | |
| 4,978,821 | |||
| Media - 6.0% | |||
| Cable & Satellite - 6.0% | |||
| Altice NV: | |||
| Class A (a) | 218,603 | 4,609,759 | |
| Class B (a) | 161,793 | 3,413,501 | |
| Liberty Global PLC Class A (a) | 99,600 | 3,555,720 | |
| NOS SGPS SA | 462,900 | 2,741,315 | |
| 14,320,295 | |||
| Semiconductors & Semiconductor Equipment - 8.9% | |||
| Semiconductors - 8.9% | |||
| ams AG | 20,000 | 923,981 | |
| Marvell Technology Group Ltd. | 150,500 | 2,347,800 | |
| Qorvo, Inc. (a) | 53,525 | 3,538,003 | |
| Qualcomm, Inc. | 205,350 | 11,598,168 | |
| Skyworks Solutions, Inc. | 29,800 | 2,825,338 | |
| 21,233,290 | |||
| Software - 0.5% | |||
| Application Software - 0.5% | |||
| RingCentral, Inc. (a) | 46,700 | 1,246,890 | |
| Technology Hardware, Storage & Peripherals - 25.8% | |||
| Technology Hardware, Storage & Peripherals - 25.8% | |||
| Apple, Inc. | 430,405 | 58,961,178 | |
| BlackBerry Ltd. (a) | 1,101 | 7,651 | |
| Samsung Electronics Co. Ltd. | 1,632 | 2,765,078 | |
| 61,733,907 | |||
| Wireless Telecommunication Services - 13.9% | |||
| Wireless Telecommunication Services - 13.9% | |||
| America Movil S.A.B. de CV Series L sponsored ADR | 19,600 | 249,116 | |
| China Mobile Ltd. sponsored ADR | 86,300 | 4,768,938 | |
| Millicom International Cellular SA | 23,200 | 1,263,820 | |
| NTT DOCOMO, Inc. sponsored ADR | 1,400 | 33,264 | |
| Rogers Communications, Inc. Class B (non-vtg.) | 6,900 | 289,673 | |
| Spok Holdings, Inc. | 1 | 18 | |
| Sprint Corp. (a) | 32 | 282 | |
| T-Mobile U.S., Inc. (a) | 268,875 | 16,812,754 | |
| Telephone & Data Systems, Inc. | 28,114 | 759,921 | |
| U.S. Cellular Corp. (a) | 5,800 | 216,862 | |
| Vodafone Group PLC sponsored ADR | 350,281 | 8,900,640 | |
| 33,295,288 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $192,203,725) | 228,344,721 | ||
| Nonconvertible Preferred Stocks - 2.1% | |||
| Diversified Telecommunication Services - 1.3% | |||
| Integrated Telecommunication Services - 1.3% | |||
| Telefonica Brasil SA | 216,100 | 3,150,787 | |
| Wireless Telecommunication Services - 0.8% | |||
| Wireless Telecommunication Services - 0.8% | |||
| TIM Participacoes SA sponsored ADR | 126,000 | 1,954,260 | |
| TOTAL NONCONVERTIBLE PREFERRED STOCKS | |||
| (Cost $4,799,397) | 5,105,047 | ||
| Money Market Funds - 4.7% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 5,328,892 | 5,329,958 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 5,870,347 | 5,871,521 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $11,200,421) | 11,201,479 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.2% | |||
| (Cost $208,203,543) | 244,651,247 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.2)% | (5,292,319) | ||
| NET ASSETS - 100% | $239,358,928 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $10,250 |
| Fidelity Securities Lending Cash Central Fund | 143,996 |
| Total | $154,246 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $228,344,721 | $219,078,366 | $9,266,355 | $-- |
| Nonconvertible Preferred Stocks | 5,105,047 | 1,954,260 | 3,150,787 | -- |
| Money Market Funds | 11,201,479 | 11,201,479 | -- | -- |
| Total Investments in Securities: | $244,651,247 | $232,234,105 | $12,417,142 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 61.0% |
| United Kingdom | 9.2% |
| France | 5.8% |
| Spain | 3.8% |
| Netherlands | 3.3% |
| Germany | 2.3% |
| Brazil | 2.1% |
| Hong Kong | 2.0% |
| Canada | 1.6% |
| Korea (South) | 1.2% |
| Portugal | 1.2% |
| Japan | 1.1% |
| Bermuda | 1.0% |
| Others (Individually Less Than 1%) | 4.4% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Wireless Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $5,519,050) — See accompanying schedule: Unaffiliated issuers (cost $197,003,122) | $233,449,768 | |
| Fidelity Central Funds (cost $11,200,421) | 11,201,479 | |
| Total Investments (cost $208,203,543) | $244,651,247 | |
| Receivable for investments sold | 599,428 | |
| Receivable for fund shares sold | 397,185 | |
| Dividends receivable | 163,456 | |
| Distributions receivable from Fidelity Central Funds | 16,656 | |
| Prepaid expenses | 774 | |
| Other receivables | 38,817 | |
| Total assets | 245,867,563 | |
| Liabilities | ||
| Payable to custodian bank | $95 | |
| Payable for fund shares redeemed | 428,493 | |
| Accrued management fee | 105,247 | |
| Other affiliated payables | 46,583 | |
| Other payables and accrued expenses | 59,301 | |
| Collateral on securities loaned | 5,868,916 | |
| Total liabilities | 6,508,635 | |
| Net Assets | $239,358,928 | |
| Net Assets consist of: | ||
| Paid in capital | $204,211,325 | |
| Undistributed net investment income | 247,360 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,548,307) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 36,448,550 | |
| Net Assets, for 26,275,592 shares outstanding | $239,358,928 | |
| Net Asset Value, offering price and redemption price per share ($239,358,928 ÷ 26,275,592 shares) | $9.11 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $4,334,917 | |
| Income from Fidelity Central Funds | 154,246 | |
| Total income | 4,489,163 | |
| Expenses | ||
| Management fee | $1,177,760 | |
| Transfer agent fees | 482,369 | |
| Accounting and security lending fees | 85,974 | |
| Custodian fees and expenses | 44,951 | |
| Independent trustees' fees and expenses | 4,682 | |
| Registration fees | 26,963 | |
| Audit | 47,199 | |
| Legal | 3,886 | |
| Miscellaneous | 2,843 | |
| Total expenses before reductions | 1,876,627 | |
| Expense reductions | (22,139) | 1,854,488 |
| Net investment income (loss) | 2,634,675 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 17,039,664 | |
| Fidelity Central Funds | 1,742 | |
| Foreign currency transactions | (8,237) | |
| Total net realized gain (loss) | 17,033,169 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 26,587,040 | |
| Assets and liabilities in foreign currencies | 2,276 | |
| Total change in net unrealized appreciation (depreciation) | 26,589,316 | |
| Net gain (loss) | 43,622,485 | |
| Net increase (decrease) in net assets resulting from operations | $46,257,160 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $2,634,675 | $2,973,552 |
| Net realized gain (loss) | 17,033,169 | 7,911,836 |
| Change in net unrealized appreciation (depreciation) | 26,589,316 | (38,703,939) |
| Net increase (decrease) in net assets resulting from operations | 46,257,160 | (27,818,551) |
| Distributions to shareholders from net investment income | (2,089,084) | (3,117,139) |
| Distributions to shareholders from net realized gain | (11,015,171) | (15,155,187) |
| Total distributions | (13,104,255) | (18,272,326) |
| Share transactions | ||
| Proceeds from sales of shares | 45,389,529 | 21,142,366 |
| Reinvestment of distributions | 12,510,630 | 17,548,853 |
| Cost of shares redeemed | (59,190,184) | (55,558,448) |
| Net increase (decrease) in net assets resulting from share transactions | (1,290,025) | (16,867,229) |
| Redemption fees | 4,168 | 1,108 |
| Total increase (decrease) in net assets | 31,867,048 | (62,956,998) |
| Net Assets | ||
| Beginning of period | 207,491,880 | 270,448,878 |
| End of period | $239,358,928 | $207,491,880 |
| Other Information | ||
| Undistributed net investment income end of period | $247,360 | $8 |
| Shares | ||
| Sold | 5,182,631 | 2,374,555 |
| Issued in reinvestment of distributions | 1,569,715 | 2,018,445 |
| Redeemed | (6,898,091) | (6,310,996) |
| Net increase (decrease) | (145,745) | (1,917,996) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Wireless Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $7.85 | $9.54 | $10.57 | $8.60 | $7.68 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .10 | .11 | .17 | .56C | .12 |
| Net realized and unrealized gain (loss) | 1.71 | (1.11) | .48 | 1.51 | .94 |
| Total from investment operations | 1.81 | (1.00) | .65 | 2.07 | 1.06 |
| Distributions from net investment income | (.09) | (.12) | (.62) | (.10) | (.14) |
| Distributions from net realized gain | (.46) | (.57) | (1.06) | – | – |
| Total distributions | (.55) | (.69) | (1.68) | (.10) | (.14) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $9.11 | $7.85 | $9.54 | $10.57 | $8.60 |
| Total ReturnE | 24.09% | (11.07)% | 7.55% | 24.11% | 13.89% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .87% | .86% | .86% | .88% | .90% |
| Expenses net of fee waivers, if any | .87% | .86% | .86% | .88% | .90% |
| Expenses net of all reductions | .86% | .85% | .85% | .86% | .87% |
| Net investment income (loss) | 1.23% | 1.23% | 1.76% | 5.91%C | 1.50% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $239,359 | $207,492 | $270,449 | $290,057 | $253,794 |
| Portfolio turnover rateH | 98% | 78% | 48% | 120% | 100% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.45 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been 1.23%.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2017
1. Organization.
Wireless Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. Share transactions on the Statement of Changes in Net Assets may contain exchanges between affiliated funds. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 28, 2017, is included at the end of the Fund's Schedule of Investments.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Fund represent a return of capital or capital gain. The Fund determines the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2017, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $43,735,077 |
| Gross unrealized depreciation | (9,778,394) |
| Net unrealized appreciation (depreciation) on securities | $33,956,683 |
| Tax Cost | $210,694,564 |
The tax-based components of distributable earnings as of period end were as follows:
| Undistributed ordinary income | $318,476 |
| Undistributed long-term capital gain | $871,601 |
| Net unrealized appreciation (depreciation) on securities and other investments | $33,957,529 |
The tax character of distributions paid was as follows:
| February 28, 2017 | February 29, 2016 | |
| Ordinary Income | $2,089,084 | $ 6,200,375 |
| Long-term Capital Gains | 11,015,171 | 12,071,951 |
| Total | $13,104,255 | $ 18,272,326 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, aggregated $209,730,300 and $226,883,841, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Fund's transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .22% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $3,346 for the period.
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $644 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $143,996.
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $20,288 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of operating expenses in the amount of $1,851.
9. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Telecommunications Portfolio and Wireless Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Telecommunications Portfolio and Wireless Portfolio (each a fund of Fidelity Select Portfolios) (the"Funds") as of February 28, 2017, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of February 28, 2017 by correspondence with the custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 19, 2017
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 90 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the funds is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Each fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
* Determined to be an "Interested Trustee" by virtue of, among other things, his or her affiliation with the trust or various entities under common control with SelectCo.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed the oil refining, drilling and marketing of petroleum products (including specialty petroleum products), recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present) and serves as its President and CEO. Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006. Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Trustee or Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006), and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue serves as a Member (2012-present) and Co-Chairman (2016-present) of the Board of Directors of United Way of New York, Member of the Board of Directors of NYC Leadership Academy (2012-present) and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services), Treasurer of United Way of New York (2012-2016), and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Carol B. Tomé (1957)
Year of Election or Appointment: 2017
Member of the Advisory Board
Ms. Tomé also serves as Trustee or Member of the Advisory Board of other Fidelity® funds. Ms. Tomé is Chief Financial Officer (2001-present) and Executive Vice President of Corporate Services (2007-present) of The Home Depot, Inc. (home improvement retailer) and a Director (2003-present) and Chair of the Audit Committee (2004-present) of United Parcel Service, Inc. (package delivery and supply chain management). Previously, Ms. Tomé served as Senior Vice President of Finance and Accounting/Treasurer (2000-2007) and Vice President and Treasurer (1995-2000) of The Home Depot, Inc. and Chair of the Board (2010-2012), Vice Chair of the Board (2009 and 2013), and a Director (2008-2013) of the Federal Reserve Bank of Atlanta. Ms. Tomé is also a director or trustee of many community and professional organizations.
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Interim Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (UK) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
Jeffrey S. Christian (1961)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Christian also serves as Assistant Treasurer of other funds. Mr. Christian is an employee of Fidelity Investments (2003-present).
William C. Coffey (1969)
Year of Election or Appointment: 2009
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Senior Vice President of Fidelity Management & Research Company (FMR) (investment adviser firm, 2016), Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of FMR (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
Colm A. Hogan (1973)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan is an employee of Fidelity Investments (2005-present). Mr. Colm A. Hogan is not related to Mr. Brian B. Hogan.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche (accounting firm, 2005-2013).
Renee Stagnone (1975)
Year of Election or Appointment: 2016
Assistant Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments or redemption proceeds, redemption fees and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2016 to February 28, 2017).
Actual Expenses
The first line of the accompanying table for each class of the Fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a class of the Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each class of the Fund provides information about hypothetical account values and hypothetical expenses based on a Class' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class' actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio-A | Beginning Account Value September 1, 2016 | Ending Account Value February 28, 2017 | Expenses Paid During Period-B September 1, 2016 to February 28, 2017 | |
| Telecommunications Portfolio | ||||
| Class A | 1.13% | |||
| Actual | $1,000.00 | $1,060.40 | $5.77 | |
| Hypothetical-C | $1,000.00 | $1,019.19 | $5.66 | |
| Class T | 1.47% | |||
| Actual | $1,000.00 | $1,058.50 | $7.50 | |
| Hypothetical-C | $1,000.00 | $1,017.50 | $7.35 | |
| Class C | 1.87% | |||
| Actual | $1,000.00 | $1,056.30 | $9.53 | |
| Hypothetical-C | $1,000.00 | $1,015.52 | $9.35 | |
| Telecommunications | .80% | |||
| Actual | $1,000.00 | $1,062.20 | $4.09 | |
| Hypothetical-C | $1,000.00 | $1,020.83 | $4.01 | |
| Class I | .81% | |||
| Actual | $1,000.00 | $1,062.10 | $4.14 | |
| Hypothetical-C | $1,000.00 | $1,020.78 | $4.06 | |
| Wireless Portfolio | .87% | |||
| Actual | $1,000.00 | $1,115.80 | $4.56 | |
| Hypothetical-C | $1,000.00 | $1,020.48 | $4.36 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Class' annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/ 365 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains | |
| Telecommunications Portfolio | 04/13/2017 | 04/12/2017 | $0.230 | $1.434 |
| Wireless Portfolio | 04/13/2017 | 04/12/2017 | $0.010 | $0.035 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2017 or, if subsequently determined to be different, the net capital gain of such year.
| Telecommunications Portfolio | $24,836,724 |
| Wireless Portfolio | $11,886,772 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 2016 | December 2016 | |
| Telecommunications Portfolio | 99% | 43% |
| Wireless Portfolio | – | 81% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| April 2016 | December 2016 | |
| Telecommunications Portfolio | 99% | 48% |
| Wireless Portfolio | – | 100% |
The funds will notify shareholders in January 2018 of amounts for use in preparing 2017 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Telecommunications Portfolio
Wireless Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. SelectCo and the sub-advisers are collectively referred to herein as the Investment Advisers. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2017 meeting, the Board unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of the Investment Advisers as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the investment personnel compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the Investment Advisers' investment staffs, including their size, education, experience, and resources, as well as Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board considered that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, compliance, and technology and operations capabilities and resources, which are integral parts of the investment management process.Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians, subcustodians, and pricing vendors; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs; (iv) broadening eligibility requirements for certain lower-priced share classes of, and streamlining the fee structure for, certain existing equity index funds; (v) lowering expense caps for certain existing funds and classes to reduce expenses paid by shareholders; (vi) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vii) rationalizing product lines and gaining increased efficiencies through fund mergers and share class consolidations; (viii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (ix) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; and (x) accelerating the conversion of all remaining Class B shares to Class A shares, which have a lower expense structure.Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.The Board took into account discussions with representatives of SelectCo about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Telecommunications Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2016, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address the fund's performance.In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing fund share classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors, including the following: general market conditions; issuer-specific information; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2016.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should continue to benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Telecommunications Portfolio
Wireless Portfolio
SELTS-ANN-0417
1.846050.110
Fidelity® Select Portfolios® Automotive Portfolio Construction and Housing Portfolio Consumer Discretionary Portfolio Leisure Portfolio Multimedia Portfolio Retailing Portfolio Annual Report February 28, 2017 |
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Contents
Automotive Portfolio | |
Construction and Housing Portfolio | |
Consumer Discretionary Portfolio | |
Leisure Portfolio | |
Multimedia Portfolio | |
Retailing Portfolio | |
Board Approval of Investment Advisory Contracts and Management Fees |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2017 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Funds. This report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Funds nor Fidelity Distributors Corporation is a bank.
Automotive Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Automotive Portfolio | 16.80% | 9.11% | 5.38% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Automotive Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $16,880 | Automotive Portfolio | |
| $20,834 | S&P 500® Index | |
Automotive Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Annie Rosen, who managed the fund for the period in review: For the year, the fund gained 16.80%, trailing the 24.75% result of the S&P® Custom Automobiles & Components Index, which performed roughly in line with the S&P 500®. Versus the industry index, weak stock selection drove results, with sub-industry allocations adding value overall. Unfavorable picks in auto parts & equipment and brief ownership of Johnson Controls hurt most. I chose to significantly underweight the automotive-parts supplier given its consistent share losses in its HVAC (heating, ventilation and air conditioning) business, which demonstrated no organic growth over the period. Johnson shares returned 27% the past 12 months, after successfully spinning out its seating business and merging with Tyco International last year. An out-of-index stake in electronically tintable glassmaker Research Frontiers detracted, as its stock fared poorly after the company reported disappointing second-quarter earnings. Conversely, underweighting Toyota Motor was our largest relative contributor. The stock performed poorly due to heavy sedan exposure in the U.S. in a period when low gas prices and shifting preferences bolstered customers’ preferences for larger vehicles. Out-of-index positions in China-based Tata Motors and Israel-based Mobileye aided relative results.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Notes to shareholders: On April 1, 2017, the fund’s industry benchmark will change from the S&P® Custom Automobiles & Components Index to the FactSet Automotive Linked Index. Due to new international benchmark guidelines, S&P® Dow Jones® Indices has decided to stop offering its brand on custom benchmarks, effective March 31, 2017. Fidelity believes that the new FactSet index will continue to provide shareholders with meaningful performance comparisons.On April 17, 2017, Elliot Mattingly became Portfolio Manager of the fund, replacing Annie Rosen.
Automotive Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Toyota Motor Corp. sponsored ADR | 11.9 | 9.2 |
| Tesla, Inc. | 9.8 | 8.9 |
| Allison Transmission Holdings, Inc. | 6.5 | 4.1 |
| General Motors Co. | 5.8 | 5.3 |
| Dana Holding Corp. | 5.5 | 0.0 |
| Ford Motor Co. | 5.3 | 5.4 |
| Tenneco, Inc. | 4.8 | 4.8 |
| Thor Industries, Inc. | 4.4 | 0.0 |
| KAR Auction Services, Inc. | 4.3 | 3.0 |
| NGK Spark Plug Co. Ltd. | 4.2 | 4.1 |
| 62.5 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Automobiles | 50.6% | |
| Auto Components | 25.1% | |
| Machinery | 6.5% | |
| Commercial Services & Supplies | 4.3% | |
| Distributors | 4.1% | |
| All Others* | 9.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Automobiles | 39.9% | |
| Auto Components | 35.6% | |
| Software | 4.2% | |
| Machinery | 4.1% | |
| Distributors | 3.1% | |
| All Others* | 13.1% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Automotive Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 96.7% | |||
| Shares | Value | ||
| Auto Components - 25.1% | |||
| Auto Parts & Equipment - 22.9% | |||
| Dana Holding Corp. | 158,200 | $2,988,398 | |
| Delphi Automotive PLC | 21,858 | 1,664,050 | |
| NGK Spark Plug Co. Ltd. | 99,500 | 2,252,245 | |
| Stoneridge, Inc. (a) | 49,340 | 833,353 | |
| Tenneco, Inc. | 40,706 | 2,617,803 | |
| Valeo SA | 9,200 | 565,393 | |
| Visteon Corp. (a) | 16,040 | 1,486,427 | |
| 12,407,669 | |||
| Tires & Rubber - 2.2% | |||
| The Goodyear Tire & Rubber Co. | 33,500 | 1,174,175 | |
| TOTAL AUTO COMPONENTS | 13,581,844 | ||
| Automobiles - 48.5% | |||
| Automobile Manufacturers - 47.4% | |||
| EDAG Engineering Group AG | 101,500 | 1,688,207 | |
| Ford Motor Co. | 227,731 | 2,853,469 | |
| General Motors Co. | 84,914 | 3,128,232 | |
| Honda Motor Co. Ltd. sponsored ADR | 71,495 | 2,214,200 | |
| Tata Motors Ltd. sponsored ADR | 49,140 | 1,650,613 | |
| Tesla, Inc. (a)(b) | 21,100 | 5,274,789 | |
| Thor Industries, Inc. | 21,700 | 2,404,794 | |
| Toyota Motor Corp. sponsored ADR | 56,817 | 6,428,841 | |
| 25,643,145 | |||
| Motorcycle Manufacturers - 1.1% | |||
| Harley-Davidson, Inc. | 10,020 | 564,928 | |
| TOTAL AUTOMOBILES | 26,208,073 | ||
| Commercial Services & Supplies - 4.3% | |||
| Diversified Support Services - 4.3% | |||
| KAR Auction Services, Inc. | 51,980 | 2,329,744 | |
| Distributors - 4.1% | |||
| Distributors - 4.1% | |||
| LKQ Corp. (a) | 69,000 | 2,179,020 | |
| Electronic Equipment & Components - 1.0% | |||
| Electronic Equipment & Instruments - 1.0% | |||
| Research Frontiers, Inc. (a)(b) | 328,172 | 551,329 | |
| Leisure Products - 2.1% | |||
| Leisure Products - 2.1% | |||
| Brunswick Corp. | 18,600 | 1,113,954 | |
| Machinery - 6.5% | |||
| Construction Machinery & Heavy Trucks - 6.5% | |||
| Allison Transmission Holdings, Inc. | 97,800 | 3,518,844 | |
| Software - 3.0% | |||
| Application Software - 3.0% | |||
| Mobileye NV (a) | 35,900 | 1,634,168 | |
| Specialty Retail - 2.1% | |||
| Automotive Retail - 2.1% | |||
| AutoZone, Inc. (a) | 1,550 | 1,141,653 | |
| TOTAL COMMON STOCKS | |||
| (Cost $37,536,704) | 52,258,629 | ||
| Nonconvertible Preferred Stocks - 2.1% | |||
| Automobiles - 2.1% | |||
| Automobile Manufacturers - 2.1% | |||
| Volkswagen AG | |||
| (Cost $1,131,744) | 7,700 | 1,139,586 | |
| Money Market Funds - 12.4% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 1,017,632 | 1,017,836 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 5,710,699 | 5,711,841 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $6,729,544) | 6,729,677 | ||
| TOTAL INVESTMENT PORTFOLIO - 111.2% | |||
| (Cost $45,397,992) | 60,127,892 | ||
| NET OTHER ASSETS (LIABILITIES) - (11.2)% | (6,058,730) | ||
| NET ASSETS - 100% | $54,069,162 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $7,508 |
| Fidelity Securities Lending Cash Central Fund | 151,907 |
| Total | $159,415 |
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
The following is a summary of transfers between Level 1 and Level 2 for the period ended February 28, 2017. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements:
| Transfers | Total |
| Level 1 to Level 2 | $0 |
| Level 2 to Level 1 | $2,954,688 |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 64.5% |
| Japan | 20.2% |
| Switzerland | 3.1% |
| Bailiwick of Jersey | 3.1% |
| India | 3.0% |
| Netherlands | 3.0% |
| Germany | 2.1% |
| France | 1.0% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Automotive Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $5,614,518) — See accompanying schedule: Unaffiliated issuers (cost $38,668,448) | $53,398,215 | |
| Fidelity Central Funds (cost $6,729,544) | 6,729,677 | |
| Total Investments (cost $45,397,992) | $60,127,892 | |
| Cash | 63,064 | |
| Receivable for fund shares sold | 42,729 | |
| Dividends receivable | 74,684 | |
| Distributions receivable from Fidelity Central Funds | 8,988 | |
| Prepaid expenses | 219 | |
| Other receivables | 3,927 | |
| Total assets | 60,321,503 | |
| Liabilities | ||
| Payable for investments purchased | $63,064 | |
| Payable for fund shares redeemed | 407,355 | |
| Accrued management fee | 25,632 | |
| Other affiliated payables | 13,037 | |
| Other payables and accrued expenses | 32,803 | |
| Collateral on securities loaned | 5,710,450 | |
| Total liabilities | 6,252,341 | |
| Net Assets | $54,069,162 | |
| Net Assets consist of: | ||
| Paid in capital | $36,406,296 | |
| Distributions in excess of net investment income | (82,188) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 3,017,011 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 14,728,043 | |
| Net Assets, for 1,470,147 shares outstanding | $54,069,162 | |
| Net Asset Value, offering price and redemption price per share ($54,069,162 ÷ 1,470,147 shares) | $36.78 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $968,813 | |
| Income from Fidelity Central Funds (including $151,907 from security lending) | 159,415 | |
| Total income | 1,128,228 | |
| Expenses | ||
| Management fee | $331,231 | |
| Transfer agent fees | 142,907 | |
| Accounting and security lending fees | 25,627 | |
| Custodian fees and expenses | 13,010 | |
| Independent trustees' fees and expenses | 1,377 | |
| Registration fees | 19,682 | |
| Audit | 41,261 | |
| Legal | 3,896 | |
| Miscellaneous | 1,077 | |
| Total expenses before reductions | 580,068 | |
| Expense reductions | (6,242) | 573,826 |
| Net investment income (loss) | 554,402 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 7,165,683 | |
| Fidelity Central Funds | 1,856 | |
| Foreign currency transactions | (3,005) | |
| Total net realized gain (loss) | 7,164,534 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 1,447,442 | |
| Assets and liabilities in foreign currencies | (428) | |
| Total change in net unrealized appreciation (depreciation) | 1,447,014 | |
| Net gain (loss) | 8,611,548 | |
| Net increase (decrease) in net assets resulting from operations | $9,165,950 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $554,402 | $1,613,597 |
| Net realized gain (loss) | 7,164,534 | 11,358,803 |
| Change in net unrealized appreciation (depreciation) | 1,447,014 | (35,349,072) |
| Net increase (decrease) in net assets resulting from operations | 9,165,950 | (22,376,672) |
| Distributions to shareholders from net investment income | (804,065) | (1,044,092) |
| Distributions to shareholders from net realized gain | (3,128,021) | (14,444,816) |
| Total distributions | (3,932,086) | (15,488,908) |
| Share transactions | ||
| Proceeds from sales of shares | 20,368,287 | 26,726,919 |
| Reinvestment of distributions | 3,717,039 | 14,872,884 |
| Cost of shares redeemed | (40,996,727) | (75,869,391) |
| Net increase (decrease) in net assets resulting from share transactions | (16,911,401) | (34,269,588) |
| Redemption fees | 1,913 | 2,686 |
| Total increase (decrease) in net assets | (11,675,624) | (72,132,482) |
| Net Assets | ||
| Beginning of period | 65,744,786 | 137,877,268 |
| End of period | $54,069,162 | $65,744,786 |
| Other Information | ||
| Undistributed net investment income end of period | $– | $170,482 |
| Distributions in excess of net investment income end of period | $(82,188) | $– |
| Shares | ||
| Sold | 560,082 | 610,209 |
| Issued in reinvestment of distributions | 104,277 | 353,475 |
| Redeemed | (1,143,684) | (1,838,445) |
| Net increase (decrease) | (479,325) | (874,761) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Automotive Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $33.72 | $48.82 | $56.95 | $40.65 | $38.05 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .33 | .65 | .42 | .22 | .24 |
| Net realized and unrealized gain (loss) | 5.22 | (9.37) | 3.05 | 16.96 | 2.65 |
| Total from investment operations | 5.55 | (8.72) | 3.47 | 17.18 | 2.89 |
| Distributions from net investment income | (.52) | (.45) | (.38) | (.15) | (.26) |
| Distributions from net realized gain | (1.98) | (5.93) | (11.22) | (.73) | (.02) |
| Total distributions | (2.49)C | (6.38) | (11.60) | (.88) | (.29)D |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $36.78 | $33.72 | $48.82 | $56.95 | $40.65 |
| Total ReturnF | 16.80% | (20.00)% | 8.04% | 42.33% | 7.64% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .96% | .87% | .85% | .84% | .91% |
| Expenses net of fee waivers, if any | .96% | .87% | .85% | .84% | .91% |
| Expenses net of all reductions | .95% | .86% | .85% | .83% | .89% |
| Net investment income (loss) | .92% | 1.49% | .82% | .43% | .66% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $54,069 | $65,745 | $137,877 | $214,227 | $142,959 |
| Portfolio turnover rateI | 83% | 80% | 71% | 148% | 72% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $2.49 per share is comprised of distributions from net investment income of $.515 and distributions from net realized gain of $1.975 per share.
D Total distributions of $.29 per share is comprised of distributions from net investment income of $.261 and distributions from net realized gain of $.024 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Construction and Housing Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Construction and Housing Portfolio | 20.23% | 15.34% | 7.92% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Construction and Housing Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $21,426 | Construction and Housing Portfolio | |
| $20,834 | S&P 500® Index | |
Construction and Housing Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Neil Nabar, who became sole Portfolio Manager on September 1, 2016, replacing Holger Boerner: For the year, the fund’s 20.23% return lagged the 23.13% return of the MSCI U.S. IMI Construction & Housing 25/50 Index. It also underperformed the broad-based S&P 500®. Security selection detracted from performance versus the MSCI industry index, most notably in the residential REITs (real estate investment trusts) and homebuilding segments. The fund’s stake in Blu Homes, a privately-held, small-cap homebuilder focused on high-end, prefabricated modular homes, did the most damage, as executional challenges delayed the timetable for the company’s profitability. Another disappointment was Extra Space Storage, a specialized REIT that is one of the largest self-storage companies in the U.S. Its performance suffered as investors shifted away from more-defensive groups and toward more-economically sensitive ones. Blu and Extra Space were not in the MSCI industry index. On the upside, picks in the strong-performing construction materials group helped, with a notable contribution from the fund’s overweighting in Martin Marietta Materials. This top-10 holding benefited from growing expectations for increased infrastructure spending and its disproportionate exposure to Texas, which has exhibited some of the nation’s fastest growth in terms of construction-materials consumption.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Construction and Housing Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Home Depot, Inc. | 24.1 | 22.5 |
| Lowe's Companies, Inc. | 8.3 | 10.3 |
| AvalonBay Communities, Inc. | 6.2 | 6.6 |
| Apartment Investment & Management Co. Class A | 3.8 | 1.2 |
| Martin Marietta Materials, Inc. | 3.3 | 3.1 |
| Camden Property Trust (SBI) | 3.3 | 0.0 |
| Fortune Brands Home & Security, Inc. | 2.9 | 3.5 |
| Johnson Controls International PLC | 2.7 | 0.0 |
| Lennar Corp. Class A | 2.7 | 0.3 |
| Vulcan Materials Co. | 2.5 | 0.2 |
| 59.8 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Specialty Retail | 32.4% | |
| Equity Real Estate Investment Trusts (Reits) | 20.6% | |
| Building Products | 17.0% | |
| Household Durables | 11.5% | |
| Construction & Engineering | 8.8% | |
| All Others* | 9.7% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Specialty Retail | 33.0% | |
| Real Estate Investment Trusts | 19.2% | |
| Household Durables | 15.1% | |
| Building Products | 14.4% | |
| Construction Materials | 7.0% | |
| All Others* | 11.3% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Construction and Housing Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 99.2% | |||
| Shares | Value | ||
| Building Products - 17.0% | |||
| Building Products - 17.0% | |||
| A.O. Smith Corp. | 185,884 | $9,361,118 | |
| Builders FirstSource, Inc. (a) | 335,408 | 4,340,180 | |
| Continental Building Products, Inc. (a) | 163,073 | 3,987,135 | |
| Fortune Brands Home & Security, Inc. | 201,084 | 11,628,688 | |
| Gibraltar Industries, Inc. (a) | 98,452 | 4,080,835 | |
| Johnson Controls International PLC | 264,054 | 11,074,425 | |
| Masco Corp. | 51,000 | 1,722,780 | |
| Masonite International Corp. (a) | 62,400 | 4,873,440 | |
| Owens Corning | 163,643 | 9,571,479 | |
| Patrick Industries, Inc. (a) | 33,100 | 2,643,035 | |
| Simpson Manufacturing Co. Ltd. | 49,300 | 2,127,788 | |
| Trex Co., Inc. (a) | 51,700 | 3,516,117 | |
| 68,927,020 | |||
| Construction & Engineering - 8.8% | |||
| Construction & Engineering - 8.8% | |||
| Chicago Bridge & Iron Co. NV | 104,016 | 3,491,817 | |
| EMCOR Group, Inc. | 101,428 | 6,235,793 | |
| Fluor Corp. | 141,424 | 7,833,475 | |
| Jacobs Engineering Group, Inc. | 128,902 | 7,271,362 | |
| KBR, Inc. | 242,954 | 3,656,458 | |
| MasTec, Inc. (a) | 89,100 | 3,497,175 | |
| Valmont Industries, Inc. | 22,000 | 3,459,500 | |
| 35,445,580 | |||
| Construction Materials - 6.8% | |||
| Construction Materials - 6.8% | |||
| Martin Marietta Materials, Inc. | 62,744 | 13,549,567 | |
| Summit Materials, Inc. | 173,710 | 4,149,932 | |
| Vulcan Materials Co. | 82,731 | 9,978,186 | |
| 27,677,685 | |||
| Equity Real Estate Investment Trusts (REITs) - 20.6% | |||
| Residential REITs - 18.7% | |||
| American Homes 4 Rent Class A | 197,469 | 4,693,838 | |
| Apartment Investment & Management Co. Class A | 334,250 | 15,552,653 | |
| AvalonBay Communities, Inc. | 135,498 | 24,901,822 | |
| Camden Property Trust (SBI) | 158,922 | 13,452,747 | |
| Equity Lifestyle Properties, Inc. | 115,100 | 9,164,262 | |
| Equity Residential (SBI) | 123,950 | 7,817,527 | |
| 75,582,849 | |||
| Specialized REITs - 1.9% | |||
| Extra Space Storage, Inc. | 99,182 | 7,854,223 | |
| TOTAL EQUITY REAL ESTATE INVESTMENT TRUSTS (REITS) | 83,437,072 | ||
| Household Durables - 11.5% | |||
| Home Furnishings - 1.0% | |||
| Mohawk Industries, Inc. (a) | 17,753 | 4,018,569 | |
| Homebuilding - 10.0% | |||
| CalAtlantic Group, Inc. | 77,577 | 2,740,795 | |
| Lennar Corp. Class A | 224,510 | 10,953,843 | |
| M/I Homes, Inc. | 84,600 | 1,996,560 | |
| NVR, Inc. (a) | 4,649 | 8,995,676 | |
| Taylor Morrison Home Corp. (a) | 164,115 | 3,303,635 | |
| Toll Brothers, Inc. (a) | 169,275 | 5,779,049 | |
| TopBuild Corp. (a) | 154,600 | 6,490,108 | |
| 40,259,666 | |||
| Household Appliances - 0.5% | |||
| Whirlpool Corp. | 11,556 | 2,063,786 | |
| TOTAL HOUSEHOLD DURABLES | 46,342,021 | ||
| Real Estate Management & Development - 2.1% | |||
| Real Estate Development - 1.1% | |||
| Howard Hughes Corp. (a) | 36,492 | 4,246,574 | |
| Real Estate Operating Companies - 0.3% | |||
| The RMR Group, Inc. | 25,032 | 1,311,677 | |
| Real Estate Services - 0.7% | |||
| Invitation Homes, Inc. | 126,300 | 2,752,077 | |
| TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | 8,310,328 | ||
| Specialty Retail - 32.4% | |||
| Home Improvement Retail - 32.4% | |||
| Home Depot, Inc. | 671,860 | 97,359,231 | |
| Lowe's Companies, Inc. | 452,670 | 33,665,068 | |
| 131,024,299 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $280,000,960) | 401,164,005 | ||
| Convertible Preferred Stocks - 0.0% | |||
| Household Durables - 0.0% | |||
| Homebuilding - 0.0% | |||
| Blu Homes, Inc. Series A, 5.00% (a)(b) | |||
| (Cost $4,000,001) | 865,801 | 51,948 | |
| Money Market Funds - 0.8% | |||
| Fidelity Cash Central Fund, 0.60% (c) | |||
| (Cost $3,476,540) | 3,475,845 | 3,476,540 | |
| TOTAL INVESTMENT PORTFOLIO - 100.0% | |||
| (Cost $287,477,501) | 404,692,493 | ||
| NET OTHER ASSETS (LIABILITIES) - 0.0% | (166,701) | ||
| NET ASSETS - 100% | $404,525,792 |
Legend
(a) Non-income producing
(b) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $51,948 or 0.0% of net assets.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| Blu Homes, Inc. Series A, 5.00% | 6/10/13 | $4,000,001 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $18,667 |
| Fidelity Securities Lending Cash Central Fund | 46,538 |
| Total | $65,205 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $401,164,005 | $401,164,005 | $-- | $-- |
| Convertible Preferred Stocks | 51,948 | -- | -- | 51,948 |
| Money Market Funds | 3,476,540 | 3,476,540 | -- | -- |
| Total Investments in Securities: | $404,692,493 | $404,640,545 | $-- | $51,948 |
See accompanying notes which are an integral part of the financial statements.
Construction and Housing Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value — See accompanying schedule: Unaffiliated issuers (cost $284,000,961) | $401,215,953 | |
| Fidelity Central Funds (cost $3,476,540) | 3,476,540 | |
| Total Investments (cost $287,477,501) | $404,692,493 | |
| Receivable for investments sold | 2,958,368 | |
| Receivable for fund shares sold | 1,088,991 | |
| Dividends receivable | 101,702 | |
| Distributions receivable from Fidelity Central Funds | 1,370 | |
| Prepaid expenses | 1,944 | |
| Other receivables | 9,818 | |
| Total assets | 408,854,686 | |
| Liabilities | ||
| Payable for investments purchased | $3,363,273 | |
| Payable for fund shares redeemed | 675,204 | |
| Accrued management fee | 180,840 | |
| Other affiliated payables | 74,315 | |
| Other payables and accrued expenses | 35,262 | |
| Total liabilities | 4,328,894 | |
| Net Assets | $404,525,792 | |
| Net Assets consist of: | ||
| Paid in capital | $275,253,476 | |
| Distributions in excess of net investment income | (84,156) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 12,141,480 | |
| Net unrealized appreciation (depreciation) on investments | 117,214,992 | |
| Net Assets, for 6,555,925 shares outstanding | $404,525,792 | |
| Net Asset Value, offering price and redemption price per share ($404,525,792 ÷ 6,555,925 shares) | $61.70 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $6,481,126 | |
| Income from Fidelity Central Funds (including $46,538 from security lending) | 65,205 | |
| Total income | 6,546,331 | |
| Expenses | ||
| Management fee | $2,540,708 | |
| Transfer agent fees | 854,574 | |
| Accounting and security lending fees | 180,966 | |
| Custodian fees and expenses | 24,206 | |
| Independent trustees' fees and expenses | 10,257 | |
| Registration fees | 36,972 | |
| Audit | 40,774 | |
| Legal | 7,379 | |
| Interest | 923 | |
| Miscellaneous | 6,083 | |
| Total expenses before reductions | 3,702,842 | |
| Expense reductions | (28,283) | 3,674,559 |
| Net investment income (loss) | 2,871,772 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 45,347,363 | |
| Fidelity Central Funds | 125 | |
| Foreign currency transactions | (10,207) | |
| Total net realized gain (loss) | 45,337,281 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 31,572,021 | |
| Assets and liabilities in foreign currencies | 8 | |
| Total change in net unrealized appreciation (depreciation) | 31,572,029 | |
| Net gain (loss) | 76,909,310 | |
| Net increase (decrease) in net assets resulting from operations | $79,781,082 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $2,871,772 | $2,748,118 |
| Net realized gain (loss) | 45,337,281 | (8,750,625) |
| Change in net unrealized appreciation (depreciation) | 31,572,029 | (43,593,256) |
| Net increase (decrease) in net assets resulting from operations | 79,781,082 | (49,595,763) |
| Distributions to shareholders from net investment income | (2,958,507) | (2,235,224) |
| Distributions to shareholders from net realized gain | (10,930,766) | (14,717,246) |
| Total distributions | (13,889,273) | (16,952,470) |
| Share transactions | ||
| Proceeds from sales of shares | 139,679,030 | 351,705,660 |
| Reinvestment of distributions | 13,323,889 | 16,385,270 |
| Cost of shares redeemed | (263,677,954) | (271,749,922) |
| Net increase (decrease) in net assets resulting from share transactions | (110,675,035) | 96,341,008 |
| Redemption fees | 5,822 | 31,411 |
| Total increase (decrease) in net assets | (44,777,404) | 29,824,186 |
| Net Assets | ||
| Beginning of period | 449,303,196 | 419,479,010 |
| End of period | $404,525,792 | $449,303,196 |
| Other Information | ||
| Distributions in excess of net investment income end of period | $(84,156) | $– |
| Shares | ||
| Sold | 2,347,435 | 5,957,476 |
| Issued in reinvestment of distributions | 225,218 | 281,591 |
| Redeemed | (4,467,875) | (4,809,523) |
| Net increase (decrease) | (1,895,222) | 1,429,544 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Construction and Housing Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $53.16 | $59.74 | $57.48 | $52.01 | $40.01 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .37 | .33 | .29 | .26 | .19 |
| Net realized and unrealized gain (loss) | 10.29 | (5.02) | 8.53 | 9.65 | 12.47 |
| Total from investment operations | 10.66 | (4.69) | 8.82 | 9.91 | 12.66 |
| Distributions from net investment income | (.45) | (.23) | (.29) | (.30) | (.14) |
| Distributions from net realized gain | (1.67) | (1.66) | (6.28) | (4.14) | (.53) |
| Total distributions | (2.12) | (1.89) | (6.56)C | (4.44) | (.67) |
| Redemption fees added to paid in capitalB | –D | –D | –D | –D | .01 |
| Net asset value, end of period | $61.70 | $53.16 | $59.74 | $57.48 | $52.01 |
| Total ReturnE | 20.23% | (8.11)% | 16.99% | 19.84% | 31.79% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .80% | .81% | .82% | .81% | .86% |
| Expenses net of fee waivers, if any | .80% | .80% | .82% | .81% | .86% |
| Expenses net of all reductions | .79% | .80% | .82% | .81% | .86% |
| Net investment income (loss) | .62% | .57% | .52% | .47% | .42% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $404,526 | $449,303 | $419,479 | $376,750 | $781,007 |
| Portfolio turnover rateH | 87% | 80% | 71% | 53% | 47% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $6.56 per share is comprised of distributions from net investment income of $.287 and distributions from net realized gain of $6.276 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Consumer Discretionary Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Consumer Discretionary Portfolio | 15.29% | 14.00% | 8.50% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Consumer Discretionary Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $22,604 | Consumer Discretionary Portfolio | |
| $20,834 | S&P 500® Index | |
Consumer Discretionary Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union –recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Peter Dixon: For the year, the fund gained 15.29%, underperforming the 18.51% result of the MSCI U.S. IMI Consumer Discretionary 25/50 Index and the 24.98% return of the broader S&P 500® index. The sector tends to underperform the broad market in the later stages of the business cycle, as was the case this period. However, stocks here were supported by a number of positives, including wage growth and an improving job market, as well as the U.S. Federal Reserve's continued accommodative monetary policy. Versus the sector index, L Brands, whose brands include Bath & Body Works, saw its shares return about -36%, making it by far our largest relative detractor. The firm faced estimate cuts and its stock suffered from multiple compression amid the company’s Victoria’s Secret brand repositioning itself to build on its strengths, reduce discounts and align selling channels. L Brands remained one of the fund's largest overweightings at period end. Also detracting was G-III Apparel Group, maker of licensed goods for brands such as Calvin Klein and Tommy Hilfiger. The fund was overweighted G-III during the first half of the period, which hurt when shares fell in July, after the stock was downgraded and investors viewed G-III's proposed acquisition of Donna Karan International as too expensive. Shares tumbled again in late August, after the firm announced disappointing quarterly financial results and lowered its fiscal 2017 guidance. We sold the fund’s stake here by period end. The fund’s sizable stake in shares of well-known athletic apparel and footwear giant Nike also hurt. Conversely, cable distributor Charter Communications, was by far our biggest relative contributor this period. Its share price rose in August after the company reported solid earnings gains from its roughly $70 billion acquisition of Time Warner Cable – along with internet provider Bright House Networks – completed in May. The merger propelled Charter from a minor player to the third-largest U.S. pay-TV company. In December, Charter shares further benefited from anticipation of greater-than-expected synergies from the acquisition. Amazon was the fund's largest holding and also a significant contributor this fiscal year, as our position returned about 52%.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Consumer Discretionary Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Amazon.com, Inc. | 14.9 | 15.0 |
| Home Depot, Inc. | 9.7 | 8.5 |
| The Walt Disney Co. | 9.6 | 8.3 |
| Charter Communications, Inc. Class A | 7.0 | 7.4 |
| NIKE, Inc. Class B | 6.4 | 5.4 |
| Dollar Tree, Inc. | 4.4 | 0.9 |
| TJX Companies, Inc. | 4.2 | 1.5 |
| L Brands, Inc. | 3.4 | 4.8 |
| Comcast Corp. Class A | 3.3 | 2.3 |
| Interpublic Group of Companies, Inc. | 2.7 | 2.7 |
| 65.6 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Media | 27.0% | |
| Specialty Retail | 20.4% | |
| Internet & Direct Marketing Retail | 17.2% | |
| Hotels, Restaurants & Leisure | 12.7% | |
| Textiles, Apparel & Luxury Goods | 8.0% | |
| All Others* | 14.7% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Specialty Retail | 25.8% | |
| Media | 23.6% | |
| Internet & Catalog Retail | 17.2% | |
| Hotels, Restaurants & Leisure | 15.0% | |
| Textiles, Apparel & Luxury Goods | 8.1% | |
| All Others* | 10.3% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Consumer Discretionary Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 99.0% | |||
| Shares | Value | ||
| Auto Components - 1.0% | |||
| Auto Parts & Equipment - 1.0% | |||
| Tenneco, Inc. | 134,116 | $8,625,000 | |
| Automobiles - 0.1% | |||
| Automobile Manufacturers - 0.1% | |||
| Ferrari NV | 13,200 | 858,792 | |
| Beverages - 1.0% | |||
| Soft Drinks - 1.0% | |||
| Monster Beverage Corp. (a) | 205,520 | 8,516,749 | |
| Distributors - 1.3% | |||
| Distributors - 1.3% | |||
| LKQ Corp. (a) | 346,669 | 10,947,807 | |
| Food & Staples Retailing - 0.1% | |||
| Food Retail - 0.1% | |||
| Zhou Hei Ya International Holdings Co. Ltd. | 1,165,500 | 1,017,930 | |
| Hotels, Restaurants & Leisure - 12.7% | |||
| Casinos & Gaming - 1.3% | |||
| Churchill Downs, Inc. | 6,900 | 1,037,070 | |
| Las Vegas Sands Corp. | 185,770 | 9,836,522 | |
| 10,873,592 | |||
| Hotels, Resorts & Cruise Lines - 3.5% | |||
| Hilton Grand Vacations, Inc. (a) | 135,187 | 4,047,499 | |
| Hilton Worldwide Holdings, Inc. | 193,386 | 11,061,679 | |
| Marriott International, Inc. Class A | 82,744 | 7,197,901 | |
| Park Hotels & Resorts, Inc. | 270,375 | 6,905,378 | |
| 29,212,457 | |||
| Leisure Facilities - 1.6% | |||
| International Speedway Corp. Class A | 64,000 | 2,374,400 | |
| Vail Resorts, Inc. | 60,189 | 10,905,043 | |
| 13,279,443 | |||
| Restaurants - 6.3% | |||
| Buffalo Wild Wings, Inc. (a) | 54,600 | 8,463,000 | |
| Darden Restaurants, Inc. | 143,700 | 10,731,516 | |
| Del Frisco's Restaurant Group, Inc. (a) | 143,557 | 2,282,556 | |
| Domino's Pizza, Inc. | 38,700 | 7,345,647 | |
| Jack in the Box, Inc. | 56,501 | 5,294,709 | |
| McDonald's Corp. | 3,660 | 467,199 | |
| Starbucks Corp. | 266,500 | 15,155,855 | |
| U.S. Foods Holding Corp. | 88,267 | 2,431,756 | |
| 52,172,238 | |||
| TOTAL HOTELS, RESTAURANTS & LEISURE | 105,537,730 | ||
| Household Durables - 0.8% | |||
| Household Appliances - 0.8% | |||
| Techtronic Industries Co. Ltd. | 1,905,500 | 6,823,854 | |
| Household Products - 2.3% | |||
| Household Products - 2.3% | |||
| Spectrum Brands Holdings, Inc. (b) | 137,602 | 18,675,343 | |
| Internet & Direct Marketing Retail - 17.2% | |||
| Internet & Direct Marketing Retail - 17.2% | |||
| Amazon.com, Inc. (a) | 146,300 | 123,629,353 | |
| Liberty Interactive Corp. QVC Group Series A (a) | 541,510 | 10,223,709 | |
| Ocado Group PLC (a)(b) | 2,670,156 | 8,250,025 | |
| 142,103,087 | |||
| Leisure Products - 1.4% | |||
| Leisure Products - 1.4% | |||
| Hasbro, Inc. | 17,800 | 1,724,286 | |
| Mattel, Inc. | 384,200 | 9,885,466 | |
| 11,609,752 | |||
| Media - 26.6% | |||
| Advertising - 2.7% | |||
| Interpublic Group of Companies, Inc. | 937,057 | 22,583,074 | |
| Broadcasting - 0.3% | |||
| CBS Corp. Class B | 35,700 | 2,353,344 | |
| Cable & Satellite - 11.4% | |||
| Charter Communications, Inc. Class A (a) | 180,369 | 58,270,009 | |
| Comcast Corp. Class A | 734,800 | 27,496,216 | |
| Naspers Ltd. Class N | 27,500 | 4,396,311 | |
| Sirius XM Holdings, Inc. (b) | 858,100 | 4,367,729 | |
| 94,530,265 | |||
| Movies & Entertainment - 12.2% | |||
| The Walt Disney Co. | 724,547 | 79,765,379 | |
| Time Warner, Inc. | 219,500 | 21,557,095 | |
| 101,322,474 | |||
| TOTAL MEDIA | 220,789,157 | ||
| Multiline Retail - 5.2% | |||
| General Merchandise Stores - 5.2% | |||
| B&M European Value Retail S.A. | 1,752,654 | 6,485,196 | |
| Dollar Tree, Inc. (a) | 479,221 | 36,746,666 | |
| 43,231,862 | |||
| Personal Products - 0.3% | |||
| Personal Products - 0.3% | |||
| Herbalife Ltd. (a) | 36,200 | 2,044,938 | |
| Software - 0.6% | |||
| Application Software - 0.6% | |||
| Mobileye NV (a) | 110,900 | 5,048,168 | |
| Specialty Retail - 20.4% | |||
| Apparel Retail - 9.8% | |||
| L Brands, Inc. | 537,625 | 28,289,828 | |
| Ross Stores, Inc. | 240,259 | 16,476,962 | |
| TJX Companies, Inc. | 446,295 | 35,011,843 | |
| Zumiez, Inc. (a) | 76,398 | 1,558,519 | |
| 81,337,152 | |||
| Automotive Retail - 0.9% | |||
| O'Reilly Automotive, Inc. (a) | 27,585 | 7,495,120 | |
| Home Improvement Retail - 9.7% | |||
| Home Depot, Inc. | 554,100 | 80,294,631 | |
| TOTAL SPECIALTY RETAIL | 169,126,903 | ||
| Textiles, Apparel & Luxury Goods - 8.0% | |||
| Apparel, Accessories & Luxury Goods - 1.6% | |||
| Regina Miracle International Holdings Ltd. (b) | 1,289,606 | 1,015,019 | |
| Under Armour, Inc. Class A (sub. vtg.) (a)(b) | 71,500 | 1,474,330 | |
| VF Corp. | 200,694 | 10,526,400 | |
| 13,015,749 | |||
| Footwear - 6.4% | |||
| NIKE, Inc. Class B | 929,250 | 53,115,930 | |
| TOTAL TEXTILES, APPAREL & LUXURY GOODS | 66,131,679 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $683,361,518) | 821,088,751 | ||
| Principal Amount | Value | ||
| Convertible Bonds - 0.4% | |||
| Media - 0.4% | |||
| Cable & Satellite - 0.4% | |||
| DISH Network Corp. 3.375% 8/15/26 (c) | |||
| (Cost $2,780,000) | 2,780,000 | 3,346,425 | |
| Shares | Value | ||
| Money Market Funds - 6.3% | |||
| Fidelity Cash Central Fund, 0.60% (d) | 24,301,409 | 24,306,269 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (d)(e) | 27,875,443 | 27,881,018 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $52,180,921) | 52,187,287 | ||
| TOTAL INVESTMENT PORTFOLIO - 105.7% | |||
| (Cost $738,322,439) | 876,622,463 | ||
| NET OTHER ASSETS (LIABILITIES) - (5.7)% | (47,630,519) | ||
| NET ASSETS - 100% | $828,991,944 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $3,346,425 or 0.4% of net assets.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(e) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $136,509 |
| Fidelity Securities Lending Cash Central Fund | 1,013,701 |
| Total | $1,150,210 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $821,088,751 | $816,692,440 | $4,396,311 | $-- |
| Convertible Bonds | 3,346,425 | -- | 3,346,425 | -- |
| Money Market Funds | 52,187,287 | 52,187,287 | -- | -- |
| Total Investments in Securities: | $876,622,463 | $868,879,727 | $7,742,736 | $-- |
The following is a summary of transfers between Level 1 and Level 2 for the period ended February 28, 2017. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements:
| Transfers | Total |
| Level 1 to Level 2 | $11,676,068 |
| Level 2 to Level 1 | $0 |
See accompanying notes which are an integral part of the financial statements.
Consumer Discretionary Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $26,551,277) — See accompanying schedule: Unaffiliated issuers (cost $686,141,518) | $824,435,176 | |
| Fidelity Central Funds (cost $52,180,921) | 52,187,287 | |
| Total Investments (cost $738,322,439) | $876,622,463 | |
| Receivable for investments sold | 1,820,422 | |
| Receivable for fund shares sold | 995,335 | |
| Dividends receivable | 1,739,411 | |
| Interest receivable | 4,170 | |
| Distributions receivable from Fidelity Central Funds | 37,436 | |
| Prepaid expenses | 4,037 | |
| Other receivables | 21,974 | |
| Total assets | 881,245,248 | |
| Liabilities | ||
| Payable for investments purchased | $313,736 | |
| Payable for fund shares redeemed | 23,493,606 | |
| Accrued management fee | 388,294 | |
| Other affiliated payables | 146,014 | |
| Other payables and accrued expenses | 36,104 | |
| Collateral on securities loaned | 27,875,550 | |
| Total liabilities | 52,253,304 | |
| Net Assets | $828,991,944 | |
| Net Assets consist of: | ||
| Paid in capital | $692,922,720 | |
| Distributions in excess of net investment income | (329,110) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,895,516) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 138,293,850 | |
| Net Assets, for 22,402,734 shares outstanding | $828,991,944 | |
| Net Asset Value, offering price and redemption price per share ($828,991,944 ÷ 22,402,734 shares) | $37.00 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $12,566,636 | |
| Interest | 52,907 | |
| Income from Fidelity Central Funds (including $1,013,701 from security lending) | 1,150,210 | |
| Total income | 13,769,753 | |
| Expenses | ||
| Management fee | $5,541,926 | |
| Transfer agent fees | 1,680,921 | |
| Accounting and security lending fees | 345,440 | |
| Custodian fees and expenses | 26,053 | |
| Independent trustees' fees and expenses | 22,629 | |
| Registration fees | 30,656 | |
| Audit | 48,221 | |
| Legal | 17,881 | |
| Interest | 85 | |
| Miscellaneous | 14,630 | |
| Total expenses before reductions | 7,728,442 | |
| Expense reductions | (51,427) | 7,677,015 |
| Net investment income (loss) | 6,092,738 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 43,686,538 | |
| Redemptions in-kind with affiliated entities | 63,305,455 | |
| Fidelity Central Funds | 2,077 | |
| Foreign currency transactions | (57,127) | |
| Total net realized gain (loss) | 106,936,943 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 18,937,761 | |
| Assets and liabilities in foreign currencies | (233) | |
| Total change in net unrealized appreciation (depreciation) | 18,937,528 | |
| Net gain (loss) | 125,874,471 | |
| Net increase (decrease) in net assets resulting from operations | $131,967,209 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $6,092,738 | $8,431,034 |
| Net realized gain (loss) | 106,936,943 | (30,256,761) |
| Change in net unrealized appreciation (depreciation) | 18,937,528 | (42,278,954) |
| Net increase (decrease) in net assets resulting from operations | 131,967,209 | (64,104,681) |
| Distributions to shareholders from net investment income | (7,587,944) | (6,151,529) |
| Distributions to shareholders from net realized gain | – | (36,964,370) |
| Total distributions | (7,587,944) | (43,115,899) |
| Share transactions | ||
| Proceeds from sales of shares | 189,032,213 | 430,866,530 |
| Reinvestment of distributions | 7,429,891 | 42,462,193 |
| Cost of shares redeemed | (610,875,058) | (326,103,388) |
| Net increase (decrease) in net assets resulting from share transactions | (414,412,954) | 147,225,335 |
| Redemption fees | 4,452 | 28,212 |
| Total increase (decrease) in net assets | (290,029,237) | 40,032,967 |
| Net Assets | ||
| Beginning of period | 1,119,021,181 | 1,078,988,214 |
| End of period | $828,991,944 | $1,119,021,181 |
| Other Information | ||
| Undistributed net investment income end of period | $– | $1,145,499 |
| Distributions in excess of net investment income end of period | $(329,110) | $– |
| Shares | ||
| Sold | 5,346,026 | 12,418,787 |
| Issued in reinvestment of distributions | 208,347 | 1,227,860 |
| Redeemed | (17,715,321) | (9,712,724) |
| Net increase (decrease) | (12,160,948) | 3,933,923 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Consumer Discretionary Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $32.38 | $35.23 | $33.30 | $27.40 | $25.97 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .21 | .24 | .15 | .04 | .11 |
| Net realized and unrealized gain (loss) | 4.73 | (1.79) | 4.39 | 8.67 | 3.70 |
| Total from investment operations | 4.94 | (1.55) | 4.54 | 8.71 | 3.81 |
| Distributions from net investment income | (.32) | (.18) | (.11) | (.03) | (.11) |
| Distributions from net realized gain | – | (1.13) | (2.51) | (2.77) | (2.27) |
| Total distributions | (.32) | (1.30)C | (2.61)D | (2.81)E | (2.38) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $37.00 | $32.38 | $35.23 | $33.30 | $27.40 |
| Total ReturnG | 15.29% | (4.60)% | 14.79% | 32.17% | 15.38% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .76% | .77% | .79% | .82% | .86% |
| Expenses net of fee waivers, if any | .76% | .77% | .79% | .82% | .86% |
| Expenses net of all reductions | .76% | .76% | .79% | .81% | .84% |
| Net investment income (loss) | .60% | .71% | .46% | .14% | .43% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $828,992 | $1,119,021 | $1,078,988 | $557,868 | $397,925 |
| Portfolio turnover rateJ | 39%K | 69% | 109%K | 138% | 170% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $1.30 per share is comprised of distributions from net investment income of $.175 and distributions from net realized gain of $1.126 per share.
D Total distributions of $2.61 per share is comprised of distributions from net investment income of $.105 and distributions from net realized gain of $2.508 per share.
E Total distributions of 2.81 per share is comprised of distributions from net investment income of $.034 and distributions from net realized gain of $2.772 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Leisure Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Leisure Portfolio | 11.26% | 11.92% | 9.98% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Leisure Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $25,883 | Leisure Portfolio | |
| $20,834 | S&P 500® Index | |
Leisure Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Katherine Shaw: For the year, the fund gained 11.26%, underperforming the 15.61% result of the MSCI U.S. IMI Consumer Services 25/50 Index and the S&P 500®. Versus the MSCI index, stock selection in the education services area was by far the largest detractor, with textbook publisher Houghton Mifflin Harcourt the fund’s biggest individual relative detractor. As it became apparent that a textbook-refresh cycle might not happen with any significant magnitude, given the shift to online materials in the classroom, I lost confidence the company could benefit from this paradigm shift, and I eliminated the position, hurting the fund's result. Long-time holding Starbucks, a coffee-chain retailer, also performed poorly. Slower growth and disappointing financial results weighed on shares, which returned -1% for the past 12 months. On the upside, stock picking and an overweighting in leisure facilities, led by a sizable stake in ski-resort operator Vail Resorts, lifted the fund’s relative result the past 12 months.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Leisure Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Starbucks Corp. | 19.4 | 21.0 |
| McDonald's Corp. | 11.5 | 10.8 |
| Las Vegas Sands Corp. | 6.7 | 6.8 |
| Marriott International, Inc. Class A | 6.0 | 4.9 |
| Yum! Brands, Inc. | 5.6 | 8.3 |
| Chipotle Mexican Grill, Inc. | 3.7 | 4.1 |
| Wyndham Worldwide Corp. | 3.4 | 4.7 |
| Vail Resorts, Inc. | 3.3 | 2.9 |
| Jack in the Box, Inc. | 3.1 | 2.6 |
| MGM Mirage, Inc. | 3.1 | 2.7 |
| 65.8 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Hotels, Restaurants & Leisure | 87.0% | |
| Diversified Consumer Services | 2.7% | |
| Specialty Retail | 1.5% | |
| Internet Software & Services | 1.3% | |
| Internet & Direct Marketing Retail | 0.9% | |
| All Others* | 6.6% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Hotels, Restaurants & Leisure | 90.3% | |
| Diversified Consumer Services | 4.4% | |
| Internet Software & Services | 1.6% | |
| Commercial Services & Supplies | 0.9% | |
| Food Products | 0.7% | |
| All Others* | 2.1% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Leisure Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 98.3% | |||
| Shares | Value | ||
| Automobiles - 0.1% | |||
| Automobile Manufacturers - 0.1% | |||
| Thor Industries, Inc. | 1,900 | $210,558 | |
| Beverages - 0.4% | |||
| Distillers & Vintners - 0.4% | |||
| Constellation Brands, Inc. Class A (sub. vtg.) | 9,100 | 1,445,171 | |
| Commercial Services & Supplies - 0.9% | |||
| Diversified Support Services - 0.9% | |||
| KAR Auction Services, Inc. | 82,500 | 3,697,650 | |
| Diversified Consumer Services - 2.7% | |||
| Specialized Consumer Services - 2.7% | |||
| Service Corp. International | 96,600 | 2,968,518 | |
| ServiceMaster Global Holdings, Inc. (a) | 198,034 | 7,887,694 | |
| 10,856,212 | |||
| Food & Staples Retailing - 0.7% | |||
| Food Distributors - 0.5% | |||
| Performance Food Group Co. (a) | 93,300 | 2,201,880 | |
| Hypermarkets & Super Centers - 0.2% | |||
| Costco Wholesale Corp. | 3,700 | 655,566 | |
| TOTAL FOOD & STAPLES RETAILING | 2,857,446 | ||
| Food Products - 0.1% | |||
| Packaged Foods & Meats - 0.1% | |||
| Amplify Snack Brands, Inc. (a)(b) | 34,600 | 346,692 | |
| Hotels, Restaurants & Leisure - 87.0% | |||
| Casinos & Gaming - 10.5% | |||
| Boyd Gaming Corp. (a) | 25,800 | 507,486 | |
| Churchill Downs, Inc. | 3,023 | 454,357 | |
| Las Vegas Sands Corp. | 512,508 | 27,137,299 | |
| Melco Crown Entertainment Ltd. sponsored ADR | 84,300 | 1,379,991 | |
| MGM Mirage, Inc. | 469,900 | 12,353,671 | |
| Wynn Resorts Ltd. | 3,700 | 355,755 | |
| 42,188,559 | |||
| Hotels, Resorts & Cruise Lines - 14.9% | |||
| Extended Stay America, Inc. unit | 216,151 | 3,739,412 | |
| Hilton Grand Vacations, Inc. (a) | 3,012 | 90,179 | |
| Hilton Worldwide Holdings, Inc. | 200,697 | 11,479,868 | |
| Marriott International, Inc. Class A | 278,096 | 24,191,571 | |
| Park Hotels & Resorts, Inc. | 6,022 | 153,802 | |
| Royal Caribbean Cruises Ltd. | 72,806 | 6,996,657 | |
| Wyndham Worldwide Corp. | 162,314 | 13,511,017 | |
| 60,162,506 | |||
| Leisure Facilities - 4.2% | |||
| Cedar Fair LP (depositary unit) | 52,043 | 3,563,905 | |
| Vail Resorts, Inc. | 74,392 | 13,478,343 | |
| 17,042,248 | |||
| Restaurants - 57.4% | |||
| ARAMARK Holdings Corp. | 64,900 | 2,319,526 | |
| Buffalo Wild Wings, Inc. (a) | 49,734 | 7,708,770 | |
| Chipotle Mexican Grill, Inc. (a) | 35,172 | 14,727,923 | |
| Dave & Buster's Entertainment, Inc. (a) | 73,614 | 4,209,985 | |
| Del Frisco's Restaurant Group, Inc. (a) | 181,600 | 2,887,440 | |
| Del Taco Restaurants, Inc. (a) | 66,581 | 826,270 | |
| Domino's Pizza, Inc. | 55,800 | 10,591,398 | |
| Dunkin' Brands Group, Inc. | 102,900 | 5,660,529 | |
| Habit Restaurants, Inc. Class A (a)(b) | 12,200 | 164,090 | |
| Jack in the Box, Inc. | 134,080 | 12,564,637 | |
| McDonald's Corp. | 361,910 | 46,197,812 | |
| Panera Bread Co. Class A (a)(b) | 39,086 | 9,021,049 | |
| Papa John's International, Inc. | 75,243 | 5,938,178 | |
| Red Robin Gourmet Burgers, Inc. (a) | 200 | 9,130 | |
| Ruth's Hospitality Group, Inc. | 167,162 | 2,816,680 | |
| Starbucks Corp. | 1,374,500 | 78,167,813 | |
| U.S. Foods Holding Corp. | 80,233 | 2,210,419 | |
| Wendy's Co. | 71,200 | 992,528 | |
| Wingstop, Inc. (b) | 66,550 | 1,750,265 | |
| Yum! Brands, Inc. | 344,836 | 22,524,688 | |
| 231,289,130 | |||
| TOTAL HOTELS, RESTAURANTS & LEISURE | 350,682,443 | ||
| Household Durables - 0.1% | |||
| Household Appliances - 0.1% | |||
| Helen of Troy Ltd. (a) | 4,500 | 439,650 | |
| Household Products - 0.3% | |||
| Household Products - 0.3% | |||
| Spectrum Brands Holdings, Inc. | 10,000 | 1,357,200 | |
| Internet & Direct Marketing Retail - 0.9% | |||
| Internet & Direct Marketing Retail - 0.9% | |||
| Amazon.com, Inc. (a) | 3,000 | 2,535,120 | |
| Liberty Interactive Corp. QVC Group Series A (a) | 67,500 | 1,274,400 | |
| 3,809,520 | |||
| Internet Software & Services - 1.3% | |||
| Internet Software & Services - 1.3% | |||
| 2U, Inc. (a) | 86,985 | 3,179,302 | |
| Facebook, Inc. Class A (a) | 15,700 | 2,127,978 | |
| 5,307,280 | |||
| IT Services - 0.6% | |||
| Data Processing & Outsourced Services - 0.6% | |||
| Global Payments, Inc. | 15,700 | 1,251,133 | |
| Visa, Inc. Class A | 13,200 | 1,160,808 | |
| 2,411,941 | |||
| Media - 0.5% | |||
| Cable & Satellite - 0.2% | |||
| Charter Communications, Inc. Class A (a) | 3,288 | 1,062,221 | |
| Movies & Entertainment - 0.3% | |||
| The Walt Disney Co. | 10,100 | 1,111,909 | |
| TOTAL MEDIA | 2,174,130 | ||
| Multiline Retail - 0.5% | |||
| General Merchandise Stores - 0.5% | |||
| Dollar Tree, Inc. (a) | 24,100 | 1,847,988 | |
| Personal Products - 0.1% | |||
| Personal Products - 0.1% | |||
| Herbalife Ltd. (a) | 7,900 | 446,271 | |
| Specialty Retail - 1.5% | |||
| Apparel Retail - 1.0% | |||
| Burlington Stores, Inc. (a) | 11,800 | 1,050,318 | |
| L Brands, Inc. | 15,500 | 815,610 | |
| TJX Companies, Inc. | 27,000 | 2,118,150 | |
| 3,984,078 | |||
| Home Improvement Retail - 0.4% | |||
| Home Depot, Inc. | 10,500 | 1,521,555 | |
| Specialty Stores - 0.1% | |||
| Sally Beauty Holdings, Inc. (a) | 25,600 | 559,872 | |
| TOTAL SPECIALTY RETAIL | 6,065,505 | ||
| Technology Hardware, Storage & Peripherals - 0.2% | |||
| Technology Hardware, Storage & Peripherals - 0.2% | |||
| Apple, Inc. | 6,000 | 821,940 | |
| Textiles, Apparel & Luxury Goods - 0.4% | |||
| Apparel, Accessories & Luxury Goods - 0.4% | |||
| LVMH Moet Hennessy - Louis Vuitton SA | 5,005 | 1,005,408 | |
| PVH Corp. | 4,465 | 408,994 | |
| 1,414,402 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $224,859,427) | 396,191,999 | ||
| Money Market Funds - 3.3% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 7,092,481 | 7,093,899 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 6,213,099 | 6,214,341 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $13,307,838) | 13,308,240 | ||
| TOTAL INVESTMENT PORTFOLIO - 101.6% | |||
| (Cost $238,167,265) | 409,500,239 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.6)% | (6,559,657) | ||
| NET ASSETS - 100% | $402,940,582 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $39,543 |
| Fidelity Securities Lending Cash Central Fund | 134,850 |
| Total | $174,393 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $396,191,999 | $395,186,591 | $1,005,408 | $-- |
| Money Market Funds | 13,308,240 | 13,308,240 | -- | -- |
| Total Investments in Securities: | $409,500,239 | $408,494,831 | $1,005,408 | $-- |
See accompanying notes which are an integral part of the financial statements.
Leisure Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $6,066,516) — See accompanying schedule: Unaffiliated issuers (cost $224,859,427) | $396,191,999 | |
| Fidelity Central Funds (cost $13,307,838) | 13,308,240 | |
| Total Investments (cost $238,167,265) | $409,500,239 | |
| Receivable for investments sold | 984,033 | |
| Receivable for fund shares sold | 135,574 | |
| Dividends receivable | 500,588 | |
| Distributions receivable from Fidelity Central Funds | 8,917 | |
| Prepaid expenses | 1,481 | |
| Other receivables | 3,797 | |
| Total assets | 411,134,629 | |
| Liabilities | ||
| Payable for investments purchased | $392,450 | |
| Payable for fund shares redeemed | 1,301,661 | |
| Accrued management fee | 184,606 | |
| Other affiliated payables | 72,584 | |
| Other payables and accrued expenses | 35,096 | |
| Collateral on securities loaned | 6,207,650 | |
| Total liabilities | 8,194,047 | |
| Net Assets | $402,940,582 | |
| Net Assets consist of: | ||
| Paid in capital | $237,282,326 | |
| Undistributed net investment income | 54,750 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (5,729,468) | |
| Net unrealized appreciation (depreciation) on investments | 171,332,974 | |
| Net Assets, for 2,850,324 shares outstanding | $402,940,582 | |
| Net Asset Value, offering price and redemption price per share ($402,940,582 ÷ 2,850,324 shares) | $141.37 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $7,753,087 | |
| Income from Fidelity Central Funds (including $134,850 from security lending) | 174,393 | |
| Total income | 7,927,480 | |
| Expenses | ||
| Management fee | $2,216,961 | |
| Transfer agent fees | 725,302 | |
| Accounting and security lending fees | 162,758 | |
| Custodian fees and expenses | 14,402 | |
| Independent trustees' fees and expenses | 8,946 | |
| Registration fees | 36,544 | |
| Audit | 42,148 | |
| Legal | 8,752 | |
| Interest | 259 | |
| Miscellaneous | 5,317 | |
| Total expenses before reductions | 3,221,389 | |
| Expense reductions | (18,192) | 3,203,197 |
| Net investment income (loss) | 4,724,283 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 4,110,049 | |
| Fidelity Central Funds | 6,213 | |
| Foreign currency transactions | (5,191) | |
| Total net realized gain (loss) | 4,111,071 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 33,167,504 | |
| Assets and liabilities in foreign currencies | 1,526 | |
| Total change in net unrealized appreciation (depreciation) | 33,169,030 | |
| Net gain (loss) | 37,280,101 | |
| Net increase (decrease) in net assets resulting from operations | $42,004,384 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $4,724,283 | $4,969,391 |
| Net realized gain (loss) | 4,111,071 | 6,756,248 |
| Change in net unrealized appreciation (depreciation) | 33,169,030 | (31,612,720) |
| Net increase (decrease) in net assets resulting from operations | 42,004,384 | (19,887,081) |
| Distributions to shareholders from net investment income | (3,947,620) | (4,443,299) |
| Distributions to shareholders from net realized gain | – | (19,302,225) |
| Total distributions | (3,947,620) | (23,745,524) |
| Share transactions | ||
| Proceeds from sales of shares | 56,175,802 | 153,197,305 |
| Reinvestment of distributions | 3,699,415 | 22,420,095 |
| Cost of shares redeemed | (111,769,338) | (160,521,528) |
| Net increase (decrease) in net assets resulting from share transactions | (51,894,121) | 15,095,872 |
| Redemption fees | 6,683 | 12,188 |
| Total increase (decrease) in net assets | (13,830,674) | (28,524,545) |
| Net Assets | ||
| Beginning of period | 416,771,256 | 445,295,801 |
| End of period | $402,940,582 | $416,771,256 |
| Other Information | ||
| Undistributed net investment income end of period | $54,750 | $– |
| Distributions in excess of net investment income end of period | $– | $(253,677) |
| Shares | ||
| Sold | 417,493 | 1,101,279 |
| Issued in reinvestment of distributions | 26,364 | 170,326 |
| Redeemed | (841,666) | (1,201,292) |
| Net increase (decrease) | (397,809) | 70,313 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Leisure Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $128.31 | $140.13 | $135.06 | $108.30 | $106.53 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.56 | 1.47 | 1.31 | 1.40C | 1.40D |
| Net realized and unrealized gain (loss) | 12.88 | (6.24) | 14.80 | 35.09 | 6.22 |
| Total from investment operations | 14.44 | (4.77) | 16.11 | 36.49 | 7.62 |
| Distributions from net investment income | (1.38) | (1.30) | (1.47) | (1.01) | (1.36) |
| Distributions from net realized gain | – | (5.75) | (9.57) | (8.72) | (4.50) |
| Total distributions | (1.38) | (7.05) | (11.04) | (9.73) | (5.86) |
| Redemption fees added to paid in capitalB | –E | –E | –E | –E | .01 |
| Net asset value, end of period | $141.37 | $128.31 | $140.13 | $135.06 | $108.30 |
| Total ReturnF | 11.26% | (3.48)% | 12.91% | 34.71% | 7.52% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .80% | .79% | .80% | .82% | .85% |
| Expenses net of fee waivers, if any | .79% | .79% | .80% | .82% | .85% |
| Expenses net of all reductions | .79% | .78% | .80% | .81% | .83% |
| Net investment income (loss) | 1.17% | 1.08% | 1.00% | 1.13%C | 1.33%D |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $402,941 | $416,771 | $445,296 | $568,149 | $347,701 |
| Portfolio turnover rateI | 23% | 48% | 32%J | 65% | 90% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.43 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .79%.
D Net Investment income per share reflects a large, non-recurring dividend which amounted to $.53 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .82%.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Multimedia Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Multimedia Portfolio | 26.85% | 16.89% | 10.47% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Multimedia Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $27,078 | Multimedia Portfolio | |
| $20,834 | S&P 500® Index | |
Multimedia Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Nidhi Gupta: For the year, the fund gained 26.85%, topping the 25.99% result of the MSCI U.S. IMI Consumer Services 25/50 Index, and outperforming the S&P 500®. The continued rise of new media platforms helped multimedia stocks outperform the broader market for the year. Versus the MSCI industry index, stock selection in cable & satellite was by far the largest contributor to the fund’s result, led by a stake in cable-services giant Charter Communications. After reporting strong earnings following its purchase of Time Warner Cable – and concurrent acquisition of internet provider Bright House Networks, Charter saw its shares rally. Also in cable & satellite, underweighting distributor Liberty Global proved positive. The company delivered weaker-than-expected financial results during the period in both its video and broadband businesses, which weighed heavily on its stock price. Conversely, unfavorable timing in media network owner AMC Networks detracted from the fund’s return versus the MSCI index. I started the period with an overweighting in this company, believing AMC could be a prime acquisition target. However, weak fundamentals dampened the stock’s performance, and I sold it in July to take advantage of other opportunities. AMC continued to underperform through period end.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Multimedia Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Comcast Corp. Class A | 18.1 | 21.9 |
| The Walt Disney Co. | 17.7 | 21.4 |
| Charter Communications, Inc. Class A | 8.2 | 9.0 |
| Time Warner, Inc. | 5.0 | 5.1 |
| Liberty Global PLC Class C | 4.7 | 3.0 |
| Twenty-First Century Fox, Inc. Class A | 3.3 | 2.7 |
| Facebook, Inc. Class A | 3.1 | 3.6 |
| Interpublic Group of Companies, Inc. | 2.9 | 2.7 |
| DISH Network Corp. Class A | 2.8 | 2.2 |
| Lions Gate Entertainment Corp. Class B | 2.7 | 1.9 |
| 68.5 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Media | 87.6% | |
| Internet Software & Services | 5.6% | |
| Technology Hardware, Storage & Peripherals | 2.0% | |
| Internet & Direct Marketing Retail | 1.9% | |
| All Others* | 2.9% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Media | 89.9% | |
| Internet Software & Services | 6.6% | |
| Internet & Catalog Retail | 3.8% | |
| All Others*,** | (0.3)% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
** Not included in the pie chart
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Multimedia Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 97.1% | |||
| Shares | Value | ||
| Internet & Direct Marketing Retail - 1.9% | |||
| Internet & Direct Marketing Retail - 1.9% | |||
| Expedia, Inc. | 50,500 | $6,011,520 | |
| Netflix, Inc. (a) | 47,400 | 6,736,962 | |
| 12,748,482 | |||
| Internet Software & Services - 5.6% | |||
| Internet Software & Services - 5.6% | |||
| Alphabet, Inc.: | |||
| Class A (a) | 10,200 | 8,618,286 | |
| Class C (a) | 10,414 | 8,572,909 | |
| Facebook, Inc. Class A (a) | 153,700 | 20,832,498 | |
| 38,023,693 | |||
| Media - 87.6% | |||
| Advertising - 3.9% | |||
| Interpublic Group of Companies, Inc. | 828,000 | 19,954,800 | |
| Omnicom Group, Inc. | 79,000 | 6,722,900 | |
| 26,677,700 | |||
| Broadcasting - 4.8% | |||
| CBS Corp. Class B | 249,800 | 16,466,816 | |
| Cumulus Media, Inc. Class A (a) | 26 | 17 | |
| Discovery Communications, Inc.: | |||
| Class A (a) | 450 | 12,942 | |
| Class C (non-vtg.) (a) | 584,900 | 16,418,143 | |
| Entercom Communications Corp. Class A (b) | 3,053 | 47,779 | |
| 32,945,697 | |||
| Cable & Satellite - 39.5% | |||
| Charter Communications, Inc. Class A (a) | 172,371 | 55,686,175 | |
| Comcast Corp. Class A | 3,286,300 | 122,973,347 | |
| DISH Network Corp. Class A (a) | 302,500 | 18,755,000 | |
| Liberty Broadband Corp.: | |||
| Class A (a) | 156,923 | 13,222,332 | |
| Class C (a) | 93,640 | 8,047,422 | |
| Liberty Global PLC: | |||
| Class A (a) | 17,338 | 618,967 | |
| Class C (a) | 917,247 | 32,186,197 | |
| Sirius XM Holdings, Inc. (b) | 3,406,800 | 17,340,612 | |
| 268,830,052 | |||
| Movies & Entertainment - 39.4% | |||
| AMC Entertainment Holdings, Inc. Class A | 43,583 | 1,366,327 | |
| Cinemark Holdings, Inc. | 380,000 | 15,910,600 | |
| Liberty Media Corp. Liberty SiriusXM Class C (a) | 420,586 | 16,373,413 | |
| Lions Gate Entertainment Corp.: | |||
| Class A (b) | 235,388 | 6,301,337 | |
| Class B (a) | 732,533 | 18,298,674 | |
| Live Nation Entertainment, Inc. (a) | 290,400 | 8,250,264 | |
| The Madison Square Garden Co. (a) | 52,099 | 9,344,477 | |
| The Walt Disney Co. | 1,091,104 | 120,119,639 | |
| Time Warner, Inc. | 348,282 | 34,204,775 | |
| Twenty-First Century Fox, Inc.: | |||
| Class A | 747,807 | 22,374,385 | |
| Class B | 84,400 | 2,477,140 | |
| Viacom, Inc. Class B (non-vtg.) | 296,800 | 12,895,960 | |
| 267,916,991 | |||
| Publishing - 0.0% | |||
| Gannett Co., Inc. | 6,937 | 60,491 | |
| TOTAL MEDIA | 596,430,931 | ||
| Technology Hardware, Storage & Peripherals - 2.0% | |||
| Technology Hardware, Storage & Peripherals - 2.0% | |||
| Apple, Inc. | 101,100 | 13,849,689 | |
| TOTAL COMMON STOCKS | |||
| (Cost $365,635,953) | 661,052,795 | ||
| Money Market Funds - 4.1% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 3,992,922 | 3,993,721 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 23,819,366 | 23,824,130 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $27,815,865) | 27,817,851 | ||
| TOTAL INVESTMENT PORTFOLIO - 101.2% | |||
| (Cost $393,451,818) | 688,870,646 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.2)% | (8,478,896) | ||
| NET ASSETS - 100% | $680,391,750 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $23,193 |
| Fidelity Securities Lending Cash Central Fund | 505,742 |
| Total | $528,935 |
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Multimedia Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $22,242,658) — See accompanying schedule: Unaffiliated issuers (cost $365,635,953) | $661,052,795 | |
| Fidelity Central Funds (cost $27,815,865) | 27,817,851 | |
| Total Investments (cost $393,451,818) | $688,870,646 | |
| Receivable for investments sold | 15,951,873 | |
| Receivable for fund shares sold | 765,270 | |
| Dividends receivable | 289,642 | |
| Distributions receivable from Fidelity Central Funds | 17,558 | |
| Prepaid expenses | 2,055 | |
| Other receivables | 1,918 | |
| Total assets | 705,898,962 | |
| Liabilities | ||
| Payable to custodian bank | $191 | |
| Payable for fund shares redeemed | 1,219,675 | |
| Accrued management fee | 308,476 | |
| Other affiliated payables | 126,651 | |
| Other payables and accrued expenses | 33,281 | |
| Collateral on securities loaned | 23,818,938 | |
| Total liabilities | 25,507,212 | |
| Net Assets | $680,391,750 | |
| Net Assets consist of: | ||
| Paid in capital | $380,701,375 | |
| Distributions in excess of net investment income | (167,902) | |
| Accumulated undistributed net realized gain (loss) on investments | 4,439,449 | |
| Net unrealized appreciation (depreciation) on investments | 295,418,828 | |
| Net Assets, for 8,425,448 shares outstanding | $680,391,750 | |
| Net Asset Value, offering price and redemption price per share ($680,391,750 ÷ 8,425,448 shares) | $80.75 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $5,885,848 | |
| Income from Fidelity Central Funds (including $505,742 from security lending) | 528,935 | |
| Total income | 6,414,783 | |
| Expenses | ||
| Management fee | $3,145,853 | |
| Transfer agent fees | 1,228,514 | |
| Accounting and security lending fees | 221,693 | |
| Custodian fees and expenses | 13,881 | |
| Independent trustees' fees and expenses | 12,494 | |
| Registration fees | 26,272 | |
| Audit | 41,961 | |
| Legal | 9,127 | |
| Interest | 302 | |
| Miscellaneous | 8,699 | |
| Total expenses before reductions | 4,708,796 | |
| Expense reductions | (15,321) | 4,693,475 |
| Net investment income (loss) | 1,721,308 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 33,245,169 | |
| Fidelity Central Funds | 3,267 | |
| Total net realized gain (loss) | 33,248,436 | |
| Change in net unrealized appreciation (depreciation) on investment securities | 102,417,983 | |
| Net gain (loss) | 135,666,419 | |
| Net increase (decrease) in net assets resulting from operations | $137,387,727 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $1,721,308 | $2,549,854 |
| Net realized gain (loss) | 33,248,436 | 54,342,127 |
| Change in net unrealized appreciation (depreciation) | 102,417,983 | (136,778,350) |
| Net increase (decrease) in net assets resulting from operations | 137,387,727 | (79,886,369) |
| Distributions to shareholders from net investment income | (2,410,179) | (1,958,887) |
| Distributions to shareholders from net realized gain | (39,255,107) | (45,417,906) |
| Total distributions | (41,665,286) | (47,376,793) |
| Share transactions | ||
| Proceeds from sales of shares | 142,629,475 | 135,578,462 |
| Reinvestment of distributions | 40,020,773 | 45,576,045 |
| Cost of shares redeemed | (174,102,382) | (280,779,334) |
| Net increase (decrease) in net assets resulting from share transactions | 8,547,866 | (99,624,827) |
| Redemption fees | 3,008 | 18,383 |
| Total increase (decrease) in net assets | 104,273,315 | (226,869,606) |
| Net Assets | ||
| Beginning of period | 576,118,435 | 802,988,041 |
| End of period | $680,391,750 | $576,118,435 |
| Other Information | ||
| Undistributed net investment income end of period | $– | $520,969 |
| Distributions in excess of net investment income end of period | $(167,902) | $– |
| Shares | ||
| Sold | 1,849,202 | 1,657,134 |
| Issued in reinvestment of distributions | 546,111 | 601,289 |
| Redeemed | (2,369,431) | (3,594,976) |
| Net increase (decrease) | 25,882 | (1,336,553) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Multimedia Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $68.59 | $82.48 | $81.74 | $61.55 | $48.48 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .22 | .27 | .22 | .20 | .53C |
| Net realized and unrealized gain (loss) | 17.53 | (8.82) | 7.62 | 22.46 | 12.96 |
| Total from investment operations | 17.75 | (8.55) | 7.84 | 22.66 | 13.49 |
| Distributions from net investment income | (.33) | (.23) | (.20) | (.19) | (.43) |
| Distributions from net realized gain | (5.26) | (5.12) | (6.89) | (2.30) | – |
| Total distributions | (5.59) | (5.34)D | (7.10)E | (2.48)F | (.43) |
| Redemption fees added to paid in capitalB | –G | –G | –G | .01 | .01 |
| Net asset value, end of period | $80.75 | $68.59 | $82.48 | $81.74 | $61.55 |
| Total ReturnH | 26.85% | (10.88)% | 10.16% | 37.01% | 27.91% |
| Ratios to Average Net AssetsI,J | |||||
| Expenses before reductions | .82% | .81% | .81% | .81% | .88% |
| Expenses net of fee waivers, if any | .82% | .81% | .81% | .81% | .88% |
| Expenses net of all reductions | .82% | .80% | .81% | .80% | .88% |
| Net investment income (loss) | .30% | .34% | .27% | .27% | .97%C |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $680,392 | $576,118 | $802,988 | $1,008,988 | $657,366 |
| Portfolio turnover rateK | 33% | 42% | 55% | 111% | 30% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.12 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .76%.
D Total distributions of $5.34 per share is comprised of distributions from net investment income of $.227 and distributions from net realized gain of $5.115 per share.
E Total distributions of $7.10 per share is comprised of distributions from net investment income of $.204 and distributions from net realized gain of $6.892 per share.
F Total distributions of $2.48 per share is comprised of distributions from net investment income of $.187 and distributions from net realized gain of $2.295 per share.
G Amount represents less than $.005 per share.
H Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
I Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
J Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
K Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Retailing Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Retailing Portfolio | 17.20% | 18.48% | 12.99% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Retailing Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $33,913 | Retailing Portfolio | |
| $20,834 | S&P 500® Index | |
Retailing Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union –recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Nicola Stafford: For the year, the fund gained 17.20%, just lagging the 17.71% result of the MSCI U.S. IMI Retailing 25/50 Index, but trailing the 24.98% return of the broader S&P 500® index. The sector tends to underperform the broad market in the later stages of the business cycle, as was the case this period. However, stocks here were supported by a number of positives, including wage growth and an improving job market, as well as the U.S. Federal Reserve's continued accommodative monetary policy. Versus the MSCI industry index, an out-of-benchmark position in G-III Apparel Group, maker of licensed goods for brands such as Calvin Klein and Tommy Hilfiger hampered performance most. Versus the MSCI industry index, a significant underweighting in the general merchandise stores group aided the fund's result. Here, avoiding discount store giant Target proved the largest relative contributor for the 12 months. We chose not to hold the stock because Target has struggled to adapt to rapidly changing consumer behavior, with online shopping and off-price retailers continuing to take market share. Also adding value was an overweighting in Ulta Beauty. Ulta beat financial expectations and raised its guidance fiscal 2017 guidance upward. Shares fell in July, after the stock was downgraded and investors viewed G-III's proposed acquisition of Donna Karan International as too expensive. The stock tumbled again in late August, after the firm announced disappointing quarterly financial results and lowered its fiscal 2017 earnings guidance. We pared the position size down considerably. Also hampering results was an overweighting in apparel maker and retailer L Brands, whose brands include Bath & Body Works. The firm faced estimate cuts and its stock suffered amid its Victoria’s Secret brand repositioning. Also hampering performance was our overweighting, on average, of the automotive retail group.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On December 31, 2016, Nicola Stafford became sole Portfolio Manager of the fund, after having served as Co-Lead Manager with Deena Friedman since October 12, 2016.Retailing Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Amazon.com, Inc. | 24.4 | 24.8 |
| Home Depot, Inc. | 19.2 | 18.8 |
| Priceline Group, Inc. | 5.9 | 5.0 |
| TJX Companies, Inc. | 4.9 | 5.5 |
| Netflix, Inc. | 4.9 | 4.6 |
| AutoZone, Inc. | 4.5 | 4.5 |
| O'Reilly Automotive, Inc. | 4.3 | 4.9 |
| Ross Stores, Inc. | 3.2 | 3.5 |
| Dollar General Corp. | 3.2 | 0.4 |
| Ulta Beauty, Inc. | 2.1 | 2.8 |
| 76.6 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Specialty Retail | 46.7% | |
| Internet & Direct Marketing Retail | 36.7% | |
| Multiline Retail | 6.3% | |
| Textiles, Apparel & Luxury Goods | 2.2% | |
| Food & Staples Retailing | 0.9% | |
| All Others* | 7.2% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Specialty Retail | 47.7% | |
| Internet & Catalog Retail | 34.4% | |
| Textiles, Apparel & Luxury Goods | 7.1% | |
| Hotels, Restaurants & Leisure | 2.3% | |
| Internet Software & Services | 2.1% | |
| All Others* | 6.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Retailing Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 95.4% | |||
| Shares | Value | ||
| Food & Staples Retailing - 0.9% | |||
| Hypermarkets & Super Centers - 0.9% | |||
| Costco Wholesale Corp. | 102,543 | 18,168,569 | |
| Hotels, Restaurants & Leisure - 0.6% | |||
| Restaurants - 0.6% | |||
| Dave & Buster's Entertainment, Inc. (a) | 213,600 | 12,215,784 | |
| Household Durables - 0.4% | |||
| Household Appliances - 0.4% | |||
| Techtronic Industries Co. Ltd. | 2,257,000 | 8,082,624 | |
| Internet & Direct Marketing Retail - 36.7% | |||
| Internet & Direct Marketing Retail - 36.7% | |||
| Amazon.com, Inc. (a) | 555,930 | 469,783,086 | |
| Liberty Interactive Corp. QVC Group Series A (a) | 1,500,000 | 28,320,000 | |
| Netflix, Inc. (a) | 657,400 | 93,436,262 | |
| Priceline Group, Inc. (a) | 66,020 | 113,827,063 | |
| 705,366,411 | |||
| Leisure Products - 0.4% | |||
| Leisure Products - 0.4% | |||
| Mattel, Inc. | 291,000 | 7,487,430 | |
| Multiline Retail - 6.3% | |||
| Department Stores - 1.4% | |||
| Macy's, Inc. | 816,500 | 27,124,130 | |
| General Merchandise Stores - 4.9% | |||
| B&M European Value Retail S.A. | 2,233,396 | 8,264,045 | |
| Dollar General Corp. | 831,900 | 60,745,338 | |
| Dollar Tree, Inc. (a) | 331,300 | 25,404,084 | |
| 94,413,467 | |||
| TOTAL MULTILINE RETAIL | 121,537,597 | ||
| Personal Products - 0.5% | |||
| Personal Products - 0.5% | |||
| Coty, Inc. Class A | 527,600 | 9,908,328 | |
| Specialty Retail - 46.7% | |||
| Apparel Retail - 11.1% | |||
| DSW, Inc. Class A | 408,500 | 8,590,755 | |
| Inditex SA | 498,570 | 15,977,121 | |
| L Brands, Inc. | 650,683 | 34,238,939 | |
| Ross Stores, Inc. | 885,900 | 60,755,022 | |
| TJX Companies, Inc. | 1,195,800 | 93,810,510 | |
| 213,372,347 | |||
| Automotive Retail - 8.8% | |||
| AutoZone, Inc. (a) | 116,763 | 86,001,788 | |
| O'Reilly Automotive, Inc. (a) | 305,086 | 82,894,917 | |
| 168,896,705 | |||
| Home Improvement Retail - 19.7% | |||
| Home Depot, Inc. | 2,548,800 | 369,346,608 | |
| Lowe's Companies, Inc. | 129,200 | 9,608,604 | |
| 378,955,212 | |||
| Homefurnishing Retail - 0.2% | |||
| RH(a)(b) | 102,100 | 3,107,924 | |
| Specialty Stores - 6.9% | |||
| Sally Beauty Holdings, Inc. (a) | 836,400 | 18,292,068 | |
| Signet Jewelers Ltd. | 278,100 | 17,684,379 | |
| Tiffany & Co., Inc. (b) | 367,200 | 33,734,664 | |
| Tractor Supply Co. | 338,600 | 24,010,126 | |
| Ulta Beauty, Inc. (a) | 146,400 | 40,030,152 | |
| 133,751,389 | |||
| TOTAL SPECIALTY RETAIL | 898,083,577 | ||
| Technology Hardware, Storage & Peripherals - 0.7% | |||
| Technology Hardware, Storage & Peripherals - 0.7% | |||
| Apple, Inc. | 95,900 | 13,137,341 | |
| Textiles, Apparel & Luxury Goods - 2.2% | |||
| Apparel, Accessories & Luxury Goods - 1.5% | |||
| G-III Apparel Group Ltd. (a) | 205,126 | 5,277,892 | |
| lululemon athletica, Inc. (a) | 119,957 | 7,828,394 | |
| Luxottica Group SpA | 149,700 | 7,896,308 | |
| Prada SpA (b) | 2,152,400 | 8,207,118 | |
| 29,209,712 | |||
| Footwear - 0.7% | |||
| NIKE, Inc. Class B | 217,840 | 12,451,734 | |
| TOTAL TEXTILES, APPAREL & LUXURY GOODS | 41,661,446 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $1,149,421,306) | 1,835,649,107 | ||
| Money Market Funds - 5.8% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 73,254,105 | 73,268,756 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 37,657,502 | 37,665,033 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $110,932,990) | 110,933,789 | ||
| TOTAL INVESTMENT PORTFOLIO - 101.2% | |||
| (Cost $1,260,354,296) | 1,946,582,896 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.2)% | (22,180,222) | ||
| NET ASSETS - 100% | $1,924,402,674 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $146,662 |
| Fidelity Securities Lending Cash Central Fund | 98,599 |
| Total | $245,261 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $1,835,649,107 | $1,811,775,678 | $23,873,429 | $-- |
| Money Market Funds | 110,933,789 | 110,933,789 | -- | -- |
| Total Investments in Securities: | $1,946,582,896 | $1,922,709,467 | $23,873,429 | $-- |
See accompanying notes which are an integral part of the financial statements.
Retailing Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $36,619,021) — See accompanying schedule: Unaffiliated issuers (cost $1,149,421,306) | $1,835,649,107 | |
| Fidelity Central Funds (cost $110,932,990) | 110,933,789 | |
| Total Investments (cost $1,260,354,296) | $1,946,582,896 | |
| Foreign currency held at value (cost $2,943,168) | 2,943,168 | |
| Receivable for investments sold | 17,378,760 | |
| Receivable for fund shares sold | 2,708,156 | |
| Dividends receivable | 1,033,443 | |
| Distributions receivable from Fidelity Central Funds | 16,134 | |
| Prepaid expenses | 7,564 | |
| Other receivables | 10,542 | |
| Total assets | 1,970,680,663 | |
| Liabilities | ||
| Payable for investments purchased | $2,943,168 | |
| Payable for fund shares redeemed | 4,405,067 | |
| Accrued management fee | 870,971 | |
| Other affiliated payables | 357,909 | |
| Other payables and accrued expenses | 38,474 | |
| Collateral on securities loaned | 37,662,400 | |
| Total liabilities | 46,277,989 | |
| Net Assets | $1,924,402,674 | |
| Net Assets consist of: | ||
| Paid in capital | $1,259,391,325 | |
| Distributions in excess of net investment income | (1,279,549) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (19,931,340) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 686,222,238 | |
| Net Assets, for 16,643,330 shares outstanding | $1,924,402,674 | |
| Net Asset Value, offering price and redemption price per share ($1,924,402,674 ÷ 16,643,330 shares) | $115.63 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $16,754,017 | |
| Interest | 12,056 | |
| Income from Fidelity Central Funds (including $98,599 from security lending) | 245,261 | |
| Total income | 17,011,334 | |
| Expenses | ||
| Management fee | $10,978,314 | |
| Transfer agent fees | 3,821,523 | |
| Accounting and security lending fees | 612,899 | |
| Custodian fees and expenses | 29,448 | |
| Independent trustees' fees and expenses | 43,909 | |
| Registration fees | 86,889 | |
| Audit | 41,748 | |
| Legal | 29,412 | |
| Interest | 2,011 | |
| Miscellaneous | 21,618 | |
| Total expenses before reductions | 15,667,771 | |
| Expense reductions | (54,252) | 15,613,519 |
| Net investment income (loss) | 1,397,815 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 18,267,536 | |
| Fidelity Central Funds | 5,295 | |
| Foreign currency transactions | (74,974) | |
| Total net realized gain (loss) | 18,197,857 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 289,170,973 | |
| Assets and liabilities in foreign currencies | 3,048 | |
| Total change in net unrealized appreciation (depreciation) | 289,174,021 | |
| Net gain (loss) | 307,371,878 | |
| Net increase (decrease) in net assets resulting from operations | $308,769,693 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $1,397,815 | $1,799,487 |
| Net realized gain (loss) | 18,197,857 | (37,105,898) |
| Change in net unrealized appreciation (depreciation) | 289,174,021 | 29,383,473 |
| Net increase (decrease) in net assets resulting from operations | 308,769,693 | (5,922,938) |
| Distributions to shareholders from net investment income | (2,743,328) | (2,519,114) |
| Distributions to shareholders from net realized gain | – | (11,161,013) |
| Total distributions | (2,743,328) | (13,680,127) |
| Share transactions | ||
| Proceeds from sales of shares | 851,900,058 | 1,567,283,062 |
| Reinvestment of distributions | 2,631,909 | 13,184,083 |
| Cost of shares redeemed | (1,086,215,468) | (626,245,827) |
| Net increase (decrease) in net assets resulting from share transactions | (231,683,501) | 954,221,318 |
| Redemption fees | 64,279 | 200,057 |
| Total increase (decrease) in net assets | 74,407,143 | 934,818,310 |
| Net Assets | ||
| Beginning of period | 1,849,995,531 | 915,177,221 |
| End of period | $1,924,402,674 | $1,849,995,531 |
| Other Information | ||
| Undistributed net investment income end of period | $– | $120,718 |
| Distributions in excess of net investment income end of period | $(1,279,549) | $– |
| Shares | ||
| Sold | 7,963,159 | 15,421,390 |
| Issued in reinvestment of distributions | 23,719 | 136,859 |
| Redeemed | (10,069,012) | (6,439,576) |
| Net increase (decrease) | (2,082,134) | 9,118,673 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Retailing Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $98.80 | $95.26 | $88.40 | $66.59 | $57.54 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .08 | .13C | .31D | .15E | .52F |
| Net realized and unrealized gain (loss) | 16.90 | 4.69G | 13.72 | 23.64 | 10.27 |
| Total from investment operations | 16.98 | 4.82 | 14.03 | 23.79 | 10.79 |
| Distributions from net investment income | (.15) | (.18) | (.17) | (.12) | (.38) |
| Distributions from net realized gain | – | (1.10) | (7.01) | (1.86) | (1.36) |
| Total distributions | (.15) | (1.29)H | (7.17)I | (1.99)J | (1.75)K |
| Redemption fees added to paid in capitalB | –L | .01 | –L | .01 | .01 |
| Net asset value, end of period | $115.63 | $98.80 | $95.26 | $88.40 | $66.59 |
| Total ReturnM | 17.20% | 5.11% | 17.29% | 35.82% | 18.98% |
| Ratios to Average Net AssetsN,O | |||||
| Expenses before reductions | .78% | .81% | .81% | .83% | .86% |
| Expenses net of fee waivers, if any | .78% | .80% | .81% | .83% | .86% |
| Expenses net of all reductions | .78% | .80% | .81% | .82% | .84% |
| Net investment income (loss) | .07% | .14%C | .36%D | .18%E | .83%F |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,924,403 | $1,849,996 | $915,177 | $1,063,920 | $643,082 |
| Portfolio turnover rateP | 17% | 11% | 31% | 72% | 119% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.12 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .02%.
D Net Investment income per share reflects a large, non-recurring dividend which amounted to $.13 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .22%.
E Net Investment income per share reflects a large, non-recurring dividend which amounted to $.08 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .08%.
F Net Investment income per share reflects a large, non-recurring dividend which amounted to $.19 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .53%.
G The amount shown for a share outstanding does not correspond with the aggregate net gain (loss) on investments for the period due to the timing of sales and repurchases of shares in relation to fluctuating market values of the investments of the Fund.
H Total distributions of $1.29 per share is comprised of distributions from net investment income of $.182 and distributions from net realized gain of $1.103 per share.
I Total distributions of $7.17 per share is comprised of distributions from net investment income of $.166 and distributions from net realized gain of $7.006 per share.
J Total distributions of $1.99 per share is comprised of distributions from net investment income of $.124 and distributions from net realized gain of $1.861 per share.
K Total distributions of $1.75 per share is comprised of distributions from net investment income of $.383 and distributions from net realized gain of $1.364 per share.
L Amount represents less than $.005 per share.
M Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
N Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
O Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
P Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2017
1. Organization.
Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio, Multimedia Portfolio, and Retailing Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the Trust). The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Share transactions on the Statement of Changes in Net Assets may contain exchanges between affiliated funds.
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but do not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of each Fund's investments to the Fair Value Committee (the Committee) established by each Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, each Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events, changes in interest rates and credit quality. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees each Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing each Fund's investments and ratifies the fair value determinations of the Committee.
Each Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Debt securities, including restricted securities, are valued based on evaluated prices received from third party pricing vendors or from brokers who make markets in such securities. Corporate bonds are valued by pricing vendors who utilize matrix pricing which considers yield or price of bonds of comparable quality, coupon, maturity and type or by broker-supplied prices. When independent prices are unavailable or unreliable, debt securities may be valued utilizing pricing methodologies which consider similar factors that would be used by third party pricing vendors. Debt securities are generally categorized as Level 2 in the hierarchy but may be Level 3 depending on the circumstances.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 28, 2017, including information on transfers between Levels 1 and 2, is included at the end of each applicable Fund's Schedule of Investments.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Funds represent a return of capital or capital gain. The Funds determine the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. During the period, dividend income has been reduced $228,110 with a corresponding increase to net unrealized appreciation (depreciation) as a result of a change in the prior period estimate, which had no impact on the total net assets or total return of Automotive Portfolio. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2017, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. Each Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, certain funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to in-kind transactions, foreign currency transactions, certain foreign taxes, partnerships, deferred trustees compensation, capital loss carryforwards, security level mergers and exchanges and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) on securities | |
| Automotive Portfolio | $45,688,403 | $15,798,102 | $(1,358,613) | $14,439,489 |
| Construction and Housing Portfolio | 287,967,903 | 121,657,124 | (4,932,534) | 116,724,590 |
| Consumer Discretionary Portfolio | 738,517,823 | 171,631,125 | (33,526,485) | 138,104,640 |
| Leisure Portfolio | 242,425,872 | 171,555,508 | (4,481,141) | 167,074,367 |
| Multimedia Portfolio | 397,603,513 | 294,383,324 | (3,116,191) | 291,267,133 |
| Retailing Portfolio | 1,261,029,649 | 730,625,651 | (45,072,404) | 685,553,247 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed ordinary income | Undistributed long-term capital gain | Capital loss carryforward | Net unrealized appreciation (depreciation) on securities and other investments | |
| Automotive Portfolio | $– | $3,307,423 | $– | $14,437,632 |
| Construction and Housing Portfolio | – | 12,631,881 | – | 116,724,590 |
| Consumer Discretionary Portfolio | – | – | (1,700,132) | 138,098,466 |
| Leisure Portfolio | 399,431 | – | (1,470,861) | 166,730,029 |
| Multimedia Portfolio | – | 8,591,144 | – | 291,267,133 |
| Retailing Portfolio | – | – | (19,255,988) | 685,546,885 |
Capital loss carryforwards are only available to offset future capital gains of the Funds to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| No expiration | ||||
| Short-term | Long-term | Total no expiration | Total capital loss carryforward | |
| Consumer Discretionary Portfolio | $(1,700,132) | $– | $(1,700,132) | $(1,700,132) |
| Leisure Portfolio | (1,470,861) | – | (1,470,861) | (1,470,861) |
| Retailing Portfolio | (19,255,988) | – | (19,255,988) | (19,255,988) |
Certain of the Funds intend to elect to defer to the next fiscal year ordinary losses recognized during the period January 1, 2017 to February 28, 2017. Loss deferrals were as follows:
| Ordinary losses | |
| Automotive Portfolio | $(82,061) |
| Construction and Housing Portfolio | (84,156) |
| Consumer Discretionary Portfolio | (329,108) |
| Multimedia Portfolio | (167,899) |
| Retailing Portfolio | (1,279,212) |
The tax character of distributions paid was as follows:
| February 28, 2017 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Automotive Portfolio | $804,065 | $3,128,021 | $3,932,086 |
| Construction and Housing Portfolio | 2,958,507 | 10,930,766 | 13,889,273 |
| Consumer Discretionary Portfolio | 7,587,944 | – | 7,587,944 |
| Leisure Portfolio | 3,947,620 | – | 3,947,620 |
| Multimedia Portfolio | 12,985,625 | 28,679,661 | 41,665,286 |
| Retailing Portfolio | 2,743,328 | – | 2,743,328 |
| February 29, 2016 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Automotive Portfolio | $1,044,092 | $14,444,816 | $15,488,908 |
| Construction and Housing Portfolio | 2,235,224 | 14,717,246 | 16,952,470 |
| Consumer Discretionary Portfolio | 6,151,529 | 36,964,370 | 43,115,899 |
| Leisure Portfolio | 4,952,234 | 18,793,290 | 23,745,524 |
| Multimedia Portfolio | 1,958,887 | 45,417,906 | 47,376,793 |
| Retailing Portfolio | 2,519,114 | 11,161,013 | 13,680,127 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital. In November 2016, the Board of Trustees approved the elimination of these redemption fees for Consumer Discretionary Portfolio and Retailing Portfolio effective December 12, 2016.
Restricted Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, are noted in the table below.
| Purchases ($) | Sales ($) | |
| Automotive Portfolio | 48,771,288 | 67,398,745 |
| Construction and Housing Portfolio | 396,901,410 | 513,758,227 |
| Consumer Discretionary Portfolio | 381,603,245 | 515,393,829 |
| Leisure Portfolio | 90,221,639 | 136,524,727 |
| Multimedia Portfolio | 186,438,858 | 235,117,345 |
| Retailing Portfolio | 335,480,219 | 607,591,976 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total | |
| Automotive Portfolio | .30% | .25% | .55% |
| Construction and Housing Portfolio | .30% | .25% | .55% |
| Consumer Discretionary Portfolio | .30% | .25% | .55% |
| Leisure Portfolio | .30% | .25% | .55% |
| Multimedia Portfolio | .30% | .25% | .55% |
| Retailing Portfolio | .30% | .25% | .55% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
| Automotive Portfolio | .24% |
| Construction and Housing Portfolio | .18% |
| Consumer Discretionary Portfolio | .17% |
| Leisure Portfolio | .18% |
| Multimedia Portfolio | .21% |
| Retailing Portfolio | .19% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Automotive Portfolio | $1,305 |
| Construction and Housing Portfolio | 16,443 |
| Consumer Discretionary Portfolio | 7,092 |
| Leisure Portfolio | 2,762 |
| Multimedia Portfolio | 3,916 |
| Retailing Portfolio | 11,878 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with Fidelity Management & Research Company (FMR) or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Construction and Housing Portfolio | Borrower | $2,784,818 | .60% | $508 |
| Consumer Discretionary Portfolio | Borrower | 5,276,000 | .58% | 85 |
| Leisure Portfolio | Borrower | 5,269,667 | .59% | 259 |
| Multimedia Portfolio | Borrower | 9,247,000 | .59% | 302 |
| Retailing Portfolio | Borrower | 14,413,500 | .84% | 2,011 |
Interfund Trades. The Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Redemptions In-Kind. During the period, 7,597,094 shares of Consumer Discretionary Portfolio held by an affiliated entity were redeemed in-kind for investments and cash with a value of $255,946,088. The net realized gain of $63,305,455 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. Consumer Discretionary Portfolio recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
| Automotive Portfolio | $192 |
| Construction and Housing Portfolio | 1,449 |
| Consumer Discretionary Portfolio | 3,196 |
| Leisure Portfolio | 1,223 |
| Multimedia Portfolio | 1,707 |
| Retailing Portfolio | 6,073 |
During the period, the Funds did not borrow on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. The Funds or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Funds may apply collateral received from the borrower against the obligation. The Funds may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
8. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Construction and Housing Portfolio | $1,664,300 | .90% | $414 |
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of Certain Funds include an amount in addition to trade execution, which may be rebated back to the Funds to offset certain expenses. In addition, through arrangements with each applicable Fund's custodian, credits realized as a result of certain invested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage Service reduction | Custody expense reduction | |
| Automotive Portfolio | $5,624 | $– |
| Construction and Housing Portfolio | 24,165 | – |
| Consumer Discretionary Portfolio | 42,857 | – |
| Leisure Portfolio | 14,504 | – |
| Multimedia Portfolio | 10,122 | – |
| Retailing Portfolio | 37,043 | 278 |
In addition, during the period the investment adviser reimbursed and/or waived a portion of operating expenses as follows:
| Amount | |
| Automotive Portfolio | $618 |
| Construction and Housing Portfolio | 4,118 |
| Consumer Discretionary Portfolio | 8,570 |
| Leisure Portfolio | 3,688 |
| Multimedia Portfolio | 5,199 |
| Retailing Portfolio | 16,931 |
10. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, the following mutual funds managed by the investment adviser or its affiliates were the owners of record of 10% or more of the total outstanding shares of the following Fund.
| VIP FundsManager 50% Portfolio | VIP FundsManager 60% Portfolio | |
| Consumer Discretionary Portfolio | 22% | 29% |
Mutual funds managed by the investment adviser or its affiliates, in aggregate, were the owners of record of more than 20% of the total outstanding shares of the following Fund.
| % of shares held | |
| Consumer Discretionary Portfolio | 62% |
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Automotive Portfolio, Construction and Housing Portfolio,Consumer Discretionary Portfolio, Leisure Portfolio, Multimedia Portfolio and Retailing Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio, Multimedia Portfolio and Retailing Portfolio (each a fund of Fidelity Select Portfolio) (the"Funds") as of February 28, 2017, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of February 28, 2017 by correspondence with the custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 17, 2017
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 90 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the funds is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Each fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
* Determined to be an "Interested Trustee" by virtue of, among other things, his or her affiliation with the trust or various entities under common control with SelectCo.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed the oil refining, drilling and marketing of petroleum products (including specialty petroleum products), recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present) and serves as its President and CEO. Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006. Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Trustee or Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006), and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue serves as a Member (2012-present) and Co-Chairman (2016-present) of the Board of Directors of United Way of New York, Member of the Board of Directors of NYC Leadership Academy (2012-present) and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services), Treasurer of United Way of New York (2012-2016), and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Carol B. Tomé (1957)
Year of Election or Appointment: 2017
Member of the Advisory Board
Ms. Tomé also serves as Trustee or Member of the Advisory Board of other Fidelity® funds. Ms. Tomé is Chief Financial Officer (2001-present) and Executive Vice President of Corporate Services (2007-present) of The Home Depot, Inc. (home improvement retailer) and a Director (2003-present) and Chair of the Audit Committee (2004-present) of United Parcel Service, Inc. (package delivery and supply chain management). Previously, Ms. Tomé served as Senior Vice President of Finance and Accounting/Treasurer (2000-2007) and Vice President and Treasurer (1995-2000) of The Home Depot, Inc. and Chair of the Board (2010-2012), Vice Chair of the Board (2009 and 2013), and a Director (2008-2013) of the Federal Reserve Bank of Atlanta. Ms. Tomé is also a director or trustee of many community and professional organizations.
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Interim Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (UK) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
Jeffrey S. Christian (1961)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Christian also serves as Assistant Treasurer of other funds. Mr. Christian is an employee of Fidelity Investments (2003-present).
William C. Coffey (1969)
Year of Election or Appointment: 2009
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Senior Vice President of Fidelity Management & Research Company (FMR) (investment adviser firm, 2016), Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of FMR (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
Colm A. Hogan (1973)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan is an employee of Fidelity Investments (2005-present). Mr. Colm A. Hogan is not related to Mr. Brian B. Hogan.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche (accounting firm, 2005-2013).
Renee Stagnone (1975)
Year of Election or Appointment: 2016
Assistant Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2016 to February 28, 2017).
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio-A | Beginning Account Value September 1, 2016 | Ending Account Value February 28, 2017 | Expenses Paid During Period-B September 1, 2016 to February 28, 2017 | |
| Automotive Portfolio | .97% | |||
| Actual | $1,000.00 | $1,056.20 | $4.95 | |
| Hypothetical-C | $1,000.00 | $1,019.98 | $4.86 | |
| Construction and Housing Portfolio | .80% | |||
| Actual | $1,000.00 | $1,045.70 | $4.06 | |
| Hypothetical-C | $1,000.00 | $1,020.83 | $4.01 | |
| Consumer Discretionary Portfolio | .76% | |||
| Actual | $1,000.00 | $1,044.60 | $3.85 | |
| Hypothetical-C | $1,000.00 | $1,021.03 | $3.81 | |
| Leisure Portfolio | .79% | |||
| Actual | $1,000.00 | $1,068.50 | $4.05 | |
| Hypothetical-C | $1,000.00 | $1,020.88 | $3.96 | |
| Multimedia Portfolio | .81% | |||
| Actual | $1,000.00 | $1,171.40 | $4.36 | |
| Hypothetical-C | $1,000.00 | $1,020.78 | $4.06 | |
| Retailing Portfolio | .78% | |||
| Actual | $1,000.00 | $1,057.30 | $3.98 | |
| Hypothetical-C | $1,000.00 | $1,020.93 | $3.91 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains | |
| Automotive Portfolio | 04/10/17 | 04/07/17 | $0.000 | $2.355 |
| Construction and Housing Portfolio | 04/10/17 | 04/07/17 | $0.000 | $1.926 |
| Consumer Discretionary Portfolio | 04/10/17 | 04/07/17 | $0.000 | $0.000 |
| Leisure Portfolio | 04/10/17 | 04/07/17 | $0.144 | $0.000 |
| Multimedia Portfolio | 04/10/17 | 04/07/17 | $0.000 | $1.039 |
| Retailing Portfolio | 04/10/17 | 04/07/17 | $0.000 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2017, or, if subsequently determined to be different, the net capital gain of such year.
| Automotive Portfolio | $6,640,598 |
| Construction and Housing Portfolio | $27,735,509 |
| Multimedia Portfolio | $22,024,158 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 2016 | December 2016 | |
| Automotive Portfolio | 100% | 98% |
| Construction and Housing Portfolio | – | 100% |
| Consumer Discretionary Portfolio | 100% | 100% |
| Leisure Portfolio | – | 100% |
| Multimedia Portfolio | 100% | 100% |
| Retailing Portfolio | 100% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| April 2016 | December 2016 | |
| Automotive Portfolio | 100% | 100% |
| Construction and Housing Portfolio | – | 100% |
| Consumer Discretionary Portfolio | 100% | 100% |
| Leisure Portfolio | – | 100% |
| Multimedia Portfolio | 100% | 100% |
| Retailing Portfolio | 100% | 100% |
The funds will notify shareholders in January 2018 of amounts for use in preparing 2017 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Automotive Portfolio
Construction and Housing Portfolio
Consumer Discretionary Portfolio
Leisure Portfolio
Multimedia Portfolio
Retailing Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. SelectCo and the sub-advisers are collectively referred to herein as the Investment Advisers. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2017 meeting, the Board unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of the Investment Advisers as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the investment personnel compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the Investment Advisers' investment staffs, including their size, education, experience, and resources, as well as Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board considered that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, compliance, and technology and operations capabilities and resources, which are integral parts of the investment management process.Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians, subcustodians, and pricing vendors; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs; (iv) broadening eligibility requirements for certain lower-priced share classes of, and streamlining the fee structure for, certain existing equity index funds; (v) lowering expense caps for certain existing funds and classes to reduce expenses paid by shareholders; (vi) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vii) rationalizing product lines and gaining increased efficiencies through fund mergers and share class consolidations; (viii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (ix) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; and (x) accelerating the conversion of all remaining Class B shares to Class A shares, which have a lower expense structure.Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.The Board took into account discussions with representatives of SelectCo about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Each of Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, and Multimedia Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2016, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address each such fund's performance.In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing fund share classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors, including the following: general market conditions; issuer-specific information; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2016.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should continue to benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Automotive Portfolio
Construction and Housing Portfolio
Consumer Discretionary Portfolio
Leisure Portfolio
Multimedia Portfolio
Retailing Portfolio
SELCON-ANN-0417
1.813633.112
Fidelity® Select Portfolios® Utilities Portfolio Annual Report February 28, 2017 |
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Contents
Board Approval of Investment Advisory Contracts and Management Fees |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2017 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Fund nor Fidelity Distributors Corporation is a bank.
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Utilities Portfolio | 18.21% | 11.92% | 5.93% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Utilities Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $17,795 | Utilities Portfolio | |
| $20,834 | S&P 500® Index | |
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks (+60%), especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Douglas Simmons: For the fiscal year, the fund gained 18.21%, outpacing the 17.26% return of the MSCI U.S. IMI Utilities 25/50 Index, but lagging the broad-based S&P 500®. Historically low interest rates and investor interest in high dividend yields bolstered demand for the utilities sector for much of the period. Against this backdrop, I maintained my focus on fundamentals, choosing companies that increase dividends at an above-average rate. Versus the MSCI index, the fund was helped by stock selection in the electric utilities segment, where avoiding regulated utility Southern Company proved advantageous. This index component faced a federal investigation, an investor lawsuit and rising operational costs. Also helping was timely ownership of independent power producer NRG Energy, which I sold in May to take profits. Still having confidence in NRG, I re-established a position in November at what I thought was an attractive valuation. Elsewhere, an out-of-index stake in Charter Communications was a notable contributor. Conversely, an out-of-index position in solar systems solutions provider First Solar notably detracted from the fund’s relative result. The stock fell sharply in May after the company reported lower-than-expected quarterly revenue. I sold the fund’s position that same month.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| NextEra Energy, Inc. | 16.9 | 14.3 |
| Sempra Energy | 12.7 | 11.8 |
| PG&E Corp. | 8.7 | 8.6 |
| Dominion Resources, Inc. | 6.3 | 8.0 |
| Avangrid, Inc. | 4.9 | 5.8 |
| Exelon Corp. | 4.9 | 4.8 |
| DTE Energy Co. | 4.8 | 4.9 |
| Great Plains Energy, Inc. | 4.4 | 0.0 |
| CenterPoint Energy, Inc. | 4.2 | 2.3 |
| FirstEnergy Corp. | 4.2 | 4.1 |
| 72.0 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Electric Utilities | 46.6% | |
| Multi-Utilities | 38.6% | |
| Independent Power and Renewable Electricity Producers | 9.9% | |
| Media | 1.2% | |
| Oil, Gas & Consumable Fuels | 1.1% | |
| All Others* | 2.6% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Electric Utilities | 51.1% | |
| Multi-Utilities | 38.3% | |
| Independent Power and Renewable Electricity Producers | 7.8% | |
| Gas Utilities | 1.0% | |
| Oil, Gas & Consumable Fuels | 0.7% | |
| All Others* | 1.1% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 98.5% | |||
| Shares | Value | ||
| Electric Utilities - 46.6% | |||
| Electric Utilities - 46.6% | |||
| Edison International | 270,412 | $21,562,653 | |
| Exelon Corp. | 923,092 | 33,886,707 | |
| FirstEnergy Corp. | 897,300 | 29,099,439 | |
| Great Plains Energy, Inc. | 1,047,468 | 30,439,420 | |
| NextEra Energy, Inc. | 900,385 | 117,950,434 | |
| OGE Energy Corp. | 401,285 | 14,779,327 | |
| PG&E Corp. | 909,204 | 60,689,367 | |
| PNM Resources, Inc. | 438,766 | 15,927,206 | |
| 324,334,553 | |||
| Gas Utilities - 1.1% | |||
| Gas Utilities - 1.1% | |||
| South Jersey Industries, Inc. | 212,495 | 7,441,575 | |
| Independent Power and Renewable Electricity Producers - 9.9% | |||
| Independent Power Producers & Energy Traders - 5.3% | |||
| Calpine Corp. (a) | 279,140 | 3,268,729 | |
| Dynegy, Inc. (a) | 562,628 | 4,523,529 | |
| NRG Energy, Inc. | 897,402 | 14,860,977 | |
| NRG Yield, Inc. Class C (b) | 805,470 | 14,015,178 | |
| 36,668,413 | |||
| Renewable Electricity - 4.6% | |||
| NextEra Energy Partners LP | 680,581 | 20,948,283 | |
| Pattern Energy Group, Inc. | 551,622 | 11,468,221 | |
| 32,416,504 | |||
| TOTAL INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS | 69,084,917 | ||
| Media - 1.2% | |||
| Cable & Satellite - 1.2% | |||
| Charter Communications, Inc. Class A (a) | 26,100 | 8,431,866 | |
| Multi-Utilities - 38.6% | |||
| Multi-Utilities - 38.6% | |||
| Avangrid, Inc. | 784,842 | 34,313,292 | |
| Black Hills Corp. | 283,228 | 18,375,833 | |
| CenterPoint Energy, Inc. | 1,075,126 | 29,372,442 | |
| Dominion Resources, Inc. | 566,168 | 43,957,284 | |
| DTE Energy Co. | 329,470 | 33,401,669 | |
| SCANA Corp. | 298,300 | 20,687,105 | |
| Sempra Energy | 799,227 | 88,146,746 | |
| 268,254,371 | |||
| Oil, Gas & Consumable Fuels - 1.1% | |||
| Oil & Gas Storage & Transport - 1.1% | |||
| Cheniere Energy Partners LP Holdings LLC | 323,342 | 7,866,911 | |
| TOTAL COMMON STOCKS | |||
| (Cost $547,382,664) | 685,414,193 | ||
| Money Market Funds - 1.2% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 8,542,668 | 8,544,377 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 68,386 | 68,400 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $8,612,777) | 8,612,777 | ||
| TOTAL INVESTMENT PORTFOLIO - 99.7% | |||
| (Cost $555,995,441) | 694,026,970 | ||
| NET OTHER ASSETS (LIABILITIES) - 0.3% | 2,111,065 | ||
| NET ASSETS - 100% | $696,138,035 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $77,665 |
| Fidelity Securities Lending Cash Central Fund | 47,631 |
| Total | $125,296 |
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $66,120) — See accompanying schedule: Unaffiliated issuers (cost $547,382,664) | $685,414,193 | |
| Fidelity Central Funds (cost $8,612,777) | 8,612,777 | |
| Total Investments (cost $555,995,441) | $694,026,970 | |
| Receivable for investments sold | 465,765 | |
| Receivable for fund shares sold | 1,291,277 | |
| Dividends receivable | 2,430,313 | |
| Distributions receivable from Fidelity Central Funds | 1,954 | |
| Prepaid expenses | 3,908 | |
| Other receivables | 15,004 | |
| Total assets | 698,235,191 | |
| Liabilities | ||
| Payable for fund shares redeemed | $1,550,302 | |
| Accrued management fee | 308,479 | |
| Transfer agent fee payable | 110,542 | |
| Other affiliated payables | 20,954 | |
| Other payables and accrued expenses | 38,479 | |
| Collateral on securities loaned | 68,400 | |
| Total liabilities | 2,097,156 | |
| Net Assets | $696,138,035 | |
| Net Assets consist of: | ||
| Paid in capital | $565,828,703 | |
| Distributions in excess of net investment income | (684) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (7,721,513) | |
| Net unrealized appreciation (depreciation) on investments | 138,031,529 | |
| Net Assets, for 9,035,197 shares outstanding | $696,138,035 | |
| Net Asset Value, offering price and redemption price per share ($696,138,035 ÷ 9,035,197 shares) | $77.05 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $25,098,493 | |
| Income from Fidelity Central Funds | 125,296 | |
| Total income | 25,223,789 | |
| Expenses | ||
| Management fee | $4,808,205 | |
| Transfer agent fees | 1,662,612 | |
| Accounting and security lending fees | 300,966 | |
| Custodian fees and expenses | 24,019 | |
| Independent trustees' fees and expenses | 19,378 | |
| Registration fees | 71,546 | |
| Audit | 43,706 | |
| Legal | 12,187 | |
| Interest | 3,896 | |
| Miscellaneous | 11,919 | |
| Total expenses before reductions | 6,958,434 | |
| Expense reductions | (107,774) | 6,850,660 |
| Net investment income (loss) | 18,373,129 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 16,536,293 | |
| Redemptions in-kind with affiliated entities | 14,595,449 | |
| Fidelity Central Funds | 566 | |
| Foreign currency transactions | (4,874) | |
| Total net realized gain (loss) | 31,127,434 | |
| Change in net unrealized appreciation (depreciation) on investment securities | 75,669,341 | |
| Net gain (loss) | 106,796,775 | |
| Net increase (decrease) in net assets resulting from operations | $125,169,904 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $18,373,129 | $15,490,825 |
| Net realized gain (loss) | 31,127,434 | (17,231,978) |
| Change in net unrealized appreciation (depreciation) | 75,669,341 | (35,538,823) |
| Net increase (decrease) in net assets resulting from operations | 125,169,904 | (37,279,976) |
| Distributions to shareholders from net investment income | (17,560,259) | (16,976,039) |
| Distributions to shareholders from net realized gain | (256,435) | (15,323,860) |
| Total distributions | (17,816,694) | (32,299,899) |
| Share transactions | ||
| Proceeds from sales of shares | 384,948,279 | 267,435,100 |
| Reinvestment of distributions | 17,007,314 | 30,970,351 |
| Cost of shares redeemed | (621,442,544) | (409,036,642) |
| Net increase (decrease) in net assets resulting from share transactions | (219,486,951) | (110,631,191) |
| Redemption fees | 36,967 | 19,963 |
| Total increase (decrease) in net assets | (112,096,774) | (180,191,103) |
| Net Assets | ||
| Beginning of period | 808,234,809 | 988,425,912 |
| End of period | $696,138,035 | $808,234,809 |
| Other Information | ||
| Undistributed net investment income end of period | $– | $465,990 |
| Distributions in excess of net investment income end of period | $(684) | $– |
| Shares | ||
| Sold | 5,289,786 | 4,003,368 |
| Issued in reinvestment of distributions | 247,779 | 462,133 |
| Redeemed | (8,587,083) | (5,948,943) |
| Net increase (decrease) | (3,049,518) | (1,483,442) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Utilities Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $66.88 | $72.85 | $70.64 | $61.04 | $52.56 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.52 | 1.39 | 1.41 | 1.49 | 1.41 |
| Net realized and unrealized gain (loss) | 10.44 | (4.49) | 6.40 | 9.80 | 7.70 |
| Total from investment operations | 11.96 | (3.10) | 7.81 | 11.29 | 9.11 |
| Distributions from net investment income | (1.77) | (1.60) | (1.20) | (1.07) | (.63) |
| Distributions from net realized gain | (.02) | (1.27) | (4.42) | (.62) | – |
| Total distributions | (1.79) | (2.87) | (5.61)C | (1.69) | (.63) |
| Redemption fees added to paid in capitalB | –D | –D | .01 | –D | –D |
| Net asset value, end of period | $77.05 | $66.88 | $72.85 | $70.64 | $61.04 |
| Total ReturnE | 18.21% | (4.19)% | 11.22% | 18.71% | 17.46% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .79% | .80% | .80% | .82% | .83% |
| Expenses net of fee waivers, if any | .79% | .79% | .80% | .82% | .83% |
| Expenses net of all reductions | .78% | .78% | .80% | .80% | .79% |
| Net investment income (loss) | 2.09% | 2.05% | 1.89% | 2.28% | 2.49% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $696,138 | $808,235 | $988,426 | $695,932 | $532,382 |
| Portfolio turnover rateH | 70%I | 74% | 129%I | 160% | 158% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $5.61 per share is comprised of distributions from net investment income of $1.199 and distributions from net realized gain of $4.415 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2017
1. Organization.
Utilities Portfolio (the Fund) is a non-diversified fund of Fidelity Select Portfolios (the Trust) and is authorized to issue an unlimited number of shares. Share transactions on the Statement of Changes in Net Assets may contain exchanges between affiliated funds. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Fund invests primarily in securities of companies whose principal business activities fall within specific industries.
2. Investments in Fidelity Central Funds.
The Fund invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Fund's Schedule of Investments lists each of the Fidelity Central Funds held as of period end, if any, as an investment of the Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, the Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Fund:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of the Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, the Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees the Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing the Fund's investments and ratifies the fair value determinations of the Committee.
The Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value the Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy.
Foreign Currency. The Fund may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Fund's investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Fund represent a return of capital or capital gain. The Fund determines the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Income Tax Information and Distributions to Shareholders. Each year, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2017, the Fund did not have any unrecognized tax benefits in the financial statements; nor is the Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. The Fund files a U.S. federal tax return, in addition to state and local tax returns as required. The Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on the Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Fund claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, redemptions in kind, deferred trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows:
| Gross unrealized appreciation | $145,513,261 |
| Gross unrealized depreciation | (8,875,313) |
| Net unrealized appreciation (depreciation) on securities | $136,637,948 |
| Tax Cost | $557,389,022 |
The tax-based components of distributable earnings as of period end were as follows:
| Capital loss carryforward | $(6,327,931) |
| Net unrealized appreciation (depreciation) on securities and other investments | $136,637,948 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Fund is permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| No expiration | |
| Short-term | $(6,327,931) |
The tax character of distributions paid was as follows:
| February 28, 2017 | February 29, 2016 | |
| Ordinary Income | $17,816,694 | $ 20,537,132 |
| Long-term Capital Gains | – | 11,762,767 |
| Total | $17,816,694 | $ 32,299,899 |
Trading (Redemption) Fees. Shares held by investors in the Fund less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Fund and accounted for as an addition to paid in capital. In November 2016, the Board of Trustees approved the elimination of these redemption fees effective December 12, 2016.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, aggregated $599,999,867 and $732,350,596, respectively.
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Fund with investment management related services for which the Fund pays a monthly management fee. The management fee is the sum of an individual fund fee rate that is based on an annual rate of .30% of the Fund's average net assets and an annualized group fee rate that averaged .25% during the period. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, the total annual management fee rate was .55% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Fund's transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annual rate of .19% of average net assets.
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains the Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. The Fund placed a portion of its portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were $21,167 for the period.
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company (FMR) or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. The Fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense |
| Borrower | $6,317,300 | .59% | $3,128 |
Interfund Trades. The Fund may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Redemptions In-Kind. During the period, 950,668 shares of the Fund held by an affiliated entity were redeemed in-kind for investments and cash with a value of $68,267,475. The net realized gain of $14,595,449 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. The Fund recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
The Fund participates with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The Fund has agreed to pay commitment fees on its pro-rata portion of the line of credit, which amounted to $2,681 and is reflected in Miscellaneous expenses on the Statement of Operations. During the period, the Fund did not borrow on this line of credit.
7. Security Lending.
The Fund lends portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, the Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. The Fund or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Fund may apply collateral received from the borrower against the obligation. The Fund may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on the Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented in the Statement of Operations as a component of income from Fidelity Central Funds. Total security lending income during the period amounted to $47,631.
8. Bank Borrowings.
The Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. The Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. The average loan balance during the period for which loans were outstanding amounted to $4,382,714. The weighted average interest rate was .90%. The interest expense amounted to $768 under the bank borrowing program. At period end, there were no bank borrowings outstanding.
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of the Fund include an amount in addition to trade execution, which may be rebated back to the Fund to offset certain expenses. This amount totaled $102,012 for the period.
In addition, during the period the investment adviser reimbursed and/or waived a portion of operating expenses in the amount of $5,762.
10. Other.
The Fund's organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and Shareholders of Utilities Portfolio:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Utilities Portfolio (a fund of Fidelity Select Portfolios) as of February 28, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Utilities Portfolio’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of February 28, 2017 by correspondence with the custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 13, 2017
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust and fund, as applicable, are listed below. The Board of Trustees governs the fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee the fund's activities, review contractual arrangements with companies that provide services to the fund, oversee management of the risks associated with such activities and contractual arrangements, and review the fund's performance. Each of the Trustees oversees 90 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the fund is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
The fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing the fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the fund, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the fund. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The fund's Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, the fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the fund's activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the fund's business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the fund are carried out by or through SelectCo, its affiliates, and other service providers, the fund's exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the fund's activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
* Determined to be an "Interested Trustee" by virtue of, among other things, his or her affiliation with the trust or various entities under common control with SelectCo.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for the fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed the oil refining, drilling and marketing of petroleum products (including specialty petroleum products), recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present) and serves as its President and CEO. Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006. Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for the fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Trustee or Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006), and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue serves as a Member (2012-present) and Co-Chairman (2016-present) of the Board of Directors of United Way of New York, Member of the Board of Directors of NYC Leadership Academy (2012-present) and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services), Treasurer of United Way of New York (2012-2016), and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Carol B. Tomé (1957)
Year of Election or Appointment: 2017
Member of the Advisory Board
Ms. Tomé also serves as Trustee or Member of the Advisory Board of other Fidelity® funds. Ms. Tomé is Chief Financial Officer (2001-present) and Executive Vice President of Corporate Services (2007-present) of The Home Depot, Inc. (home improvement retailer) and a Director (2003-present) and Chair of the Audit Committee (2004-present) of United Parcel Service, Inc. (package delivery and supply chain management). Previously, Ms. Tomé served as Senior Vice President of Finance and Accounting/Treasurer (2000-2007) and Vice President and Treasurer (1995-2000) of The Home Depot, Inc. and Chair of the Board (2010-2012), Vice Chair of the Board (2009 and 2013), and a Director (2008-2013) of the Federal Reserve Bank of Atlanta. Ms. Tomé is also a director or trustee of many community and professional organizations.
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Interim Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (UK) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
Jeffrey S. Christian (1961)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Christian also serves as Assistant Treasurer of other funds. Mr. Christian is an employee of Fidelity Investments (2003-present).
William C. Coffey (1969)
Year of Election or Appointment: 2009
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Senior Vice President of Fidelity Management & Research Company (FMR) (investment adviser firm, 2016), Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of FMR (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
Colm A. Hogan (1973)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan is an employee of Fidelity Investments (2005-present). Mr. Colm A. Hogan is not related to Mr. Brian B. Hogan.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche (accounting firm, 2005-2013).
Renee Stagnone (1975)
Year of Election or Appointment: 2016
Assistant Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2016 to February 28, 2017).
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio-A | Beginning Account Value September 1, 2016 | Ending Account Value February 28, 2017 | Expenses Paid During Period-B September 1, 2016 to February 28, 2017 | |
| Actual | .79% | $1,000.00 | $1,085.50 | $4.09 |
| Hypothetical-C | $1,000.00 | $1,020.88 | $3.96 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to the Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The fund designates 100% of the dividends distributed during the fiscal year as qualifying for the dividends–received deduction for corporate shareholders.
The fund designates 100% of the dividends distributed during the fiscal year as amounts which may be taken into account as a dividend for the purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
The fund will notify shareholders in January 2018 of amounts for use in preparing 2017 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Utilities Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for the fund. SelectCo and the sub-advisers are collectively referred to herein as the Investment Advisers. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of the fund's Advisory Contracts, including the services and support provided to the fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of the fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of the fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2017 meeting, the Board unanimously determined to renew the fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to the fund and its shareholders (including the investment performance of the fund); (ii) the competitiveness of the fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with the fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as the fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for the fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of the fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of the fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that the fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in this fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of the Investment Advisers as it relates to the fund, including the backgrounds of investment personnel of SelectCo, and also considered the fund's investment objective, strategies, and related investment philosophy. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the investment personnel compensation program and whether this structure provides appropriate incentives to act in the best interests of the fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the Investment Advisers' investment staffs, including their size, education, experience, and resources, as well as Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board considered that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, compliance, and technology and operations capabilities and resources, which are integral parts of the investment management process.Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for the fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians, subcustodians, and pricing vendors; and (iii) the resources devoted to, and the record of compliance with, the fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs; (iv) broadening eligibility requirements for certain lower-priced share classes of, and streamlining the fee structure for, certain existing equity index funds; (v) lowering expense caps for certain existing funds and classes to reduce expenses paid by shareholders; (vi) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vii) rationalizing product lines and gaining increased efficiencies through fund mergers and share class consolidations; (viii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (ix) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; and (x) accelerating the conversion of all remaining Class B shares to Class A shares, which have a lower expense structure.Investment Performance. The Board considered whether the fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.The Board took into account discussions with representatives of SelectCo about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for the fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. The fund underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2016, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address the fund's performance.In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing fund share classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors, including the following: general market conditions; issuer-specific information; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for the fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2016.Based on its review, the Board concluded that the nature, extent, and quality of services provided to the fund under the Advisory Contracts should continue to benefit the shareholders of the fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered the fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the chart below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than the fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than the fund. The fund's actual TMG %s and the number of funds in the Total Mapped Group are in the chart below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which the fund's management fee rate ranked, is also included in the chart and considered by the Board.Utilities Portfolio
SELUTL-ANN-0417
1.813626.112
Fidelity® Select Portfolios® Communications Equipment Portfolio Computers Portfolio IT Services Portfolio Semiconductors Portfolio (formerly Electronics Portfolio) Software and IT Services Portfolio Technology Portfolio Annual Report February 28, 2017 |
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Contents
Communications Equipment Portfolio | |
Computers Portfolio | |
IT Services Portfolio | |
Semiconductors Portfolio | |
Software and IT Services Portfolio | |
Technology Portfolio | |
Board Approval of Investment Advisory Contracts and Management Fees |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
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Communications Equipment Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Communications Equipment Portfolio | 29.24% | 9.50% | 6.54% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Communications Equipment Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $18,842 | Communications Equipment Portfolio | |
| $20,834 | S&P 500® Index | |
Communications Equipment Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Colin Anderson: For the year, the fund returned 29.24% return, considerably better than the 21.60% gain of the S&P® Custom Communications Equipment Index and also topping the S&P 500®. Versus the S&P® industry index, stock selection in the fund’s core group of communications equipment was responsible for the vast majority of our excess gain, with picks in the semiconductors and technology hardware, storage & peripherals groups also contributing. The fund’s top relative contributor was CommScope Holding, our largest overweighting and third-largest holding at period end. This company provides cables, antennas and other network-infrastructure equipment to a variety of markets. The stock returned 51% for the 12-month reporting period. An underweighting in weak-performing index name Nokia – a Finland-based provider of mobile-network infrastructure – and an overweighting in F5 Networks – an application-delivery services provider – also aided our relative result. Conversely, a small cash position weighed a bit on relative performance. The fund’s eight biggest relative detractors were strong-performing index stocks we either underweighted or didn’t own at all. For example, our largest relative detractor was an underweighted stake in Arista Networks, which supplies cloud-networking solutions. Canada-based Sierra Wireless, a manufacturer of wireless infrastructure equipment, also hurt relative results. We briefly had a small position here, but I Iiquidated it in November, mainly for valuation reasons.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On April 1, 2017, the fund’s industry benchmark will change from the S&P Custom Communications Equipment Index to the MSCI North America IMI + ADR Custom Communications Equipment 25/50 Index. Due to new international benchmark guidelines, S&P Dow Jones Indices has decided to stop offering its brand on custom benchmarks, effective March 31, 2017. Fidelity believes that the new MSCI index will continue to provide shareholders with meaningful performance comparisons.Communications Equipment Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Cisco Systems, Inc. | 24.4 | 20.1 |
| Qualcomm, Inc. | 15.8 | 17.2 |
| CommScope Holding Co., Inc. | 6.1 | 5.2 |
| Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 4.9 | 4.9 |
| Harris Corp. | 4.9 | 5.0 |
| F5 Networks, Inc. | 4.6 | 5.2 |
| Nokia Corp. sponsored ADR | 4.4 | 4.6 |
| Juniper Networks, Inc. | 4.3 | 4.3 |
| Finisar Corp. | 2.4 | 1.8 |
| Brocade Communications Systems, Inc. | 2.2 | 3.9 |
| 74.0 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Communications Equipment | 74.4% | |
| Semiconductors & Semiconductor Equipment | 18.0% | |
| Technology Hardware, Storage & Peripherals | 2.0% | |
| Electronic Equipment & Components | 1.7% | |
| Internet Software & Services | 1.7% | |
| All Others* | 2.2% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Communications Equipment | 72.4% | |
| Semiconductors & Semiconductor Equipment | 17.9% | |
| Technology Hardware, Storage & Peripherals | 3.6% | |
| Internet Software & Services | 1.9% | |
| Electronic Equipment & Components | 1.8% | |
| All Others* | 2.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Communications Equipment Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 98.9% | |||
| Shares | Value | ||
| Communications Equipment - 74.4% | |||
| Communications Equipment - 74.4% | |||
| ADTRAN, Inc. | 89,900 | $1,901,385 | |
| Arista Networks, Inc. (a) | 10,000 | 1,189,900 | |
| Arris International PLC (a) | 105,085 | 2,711,193 | |
| Brocade Communications Systems, Inc. | 360,550 | 4,438,371 | |
| Calix Networks, Inc. (a) | 100,421 | 692,905 | |
| Cisco Systems, Inc. | 1,459,299 | 49,878,838 | |
| CommScope Holding Co., Inc. (a) | 329,171 | 12,524,957 | |
| Comtech Telecommunications Corp. | 37,400 | 426,734 | |
| EchoStar Holding Corp. Class A (a) | 16,500 | 878,955 | |
| F5 Networks, Inc. (a) | 65,335 | 9,360,545 | |
| Finisar Corp. (a) | 143,500 | 4,804,380 | |
| Harris Corp. | 91,800 | 10,088,820 | |
| Infinera Corp. (a) | 69,214 | 750,972 | |
| InterDigital, Inc. | 33,800 | 2,840,890 | |
| Ixia (a) | 99,300 | 1,946,280 | |
| Juniper Networks, Inc. | 316,412 | 8,859,536 | |
| Lumentum Holdings, Inc. (a) | 23,320 | 1,070,388 | |
| Mitel Networks Corp. (a) | 77,900 | 515,698 | |
| Motorola Solutions, Inc. | 42,359 | 3,345,090 | |
| NETGEAR, Inc. (a) | 23,250 | 1,274,100 | |
| NetScout Systems, Inc. (a) | 67,700 | 2,501,515 | |
| Nokia Corp. sponsored ADR (b) | 1,767,303 | 9,083,937 | |
| Oclaro, Inc. (a) | 19,304 | 164,084 | |
| Palo Alto Networks, Inc. (a) | 28,800 | 4,374,720 | |
| Plantronics, Inc. | 18,234 | 976,613 | |
| Radware Ltd. (a) | 67,291 | 1,039,646 | |
| Sandvine Corp. (U.K.) (b) | 317,600 | 683,885 | |
| ShoreTel, Inc. (a) | 49,500 | 321,750 | |
| Sonus Networks, Inc. (a) | 96,560 | 569,704 | |
| Telefonaktiebolaget LM Ericsson (B Shares) sponsored ADR | 1,565,980 | 10,100,571 | |
| ViaSat, Inc. (a) | 4,200 | 289,128 | |
| Viavi Solutions, Inc. (a) | 264,400 | 2,649,288 | |
| 152,254,778 | |||
| Construction & Engineering - 0.0% | |||
| Construction & Engineering - 0.0% | |||
| Dycom Industries, Inc. (a) | 565 | 46,432 | |
| Electronic Equipment & Components - 1.7% | |||
| Electronic Components - 0.1% | |||
| II-VI, Inc. (a) | 8,400 | 299,040 | |
| Electronic Manufacturing Services - 0.6% | |||
| Fabrinet (a) | 8,600 | 357,330 | |
| Jabil Circuit, Inc. | 35,000 | 892,850 | |
| 1,250,180 | |||
| Technology Distributors - 1.0% | |||
| CDW Corp. | 19,100 | 1,124,990 | |
| Dell Technologies, Inc. (a) | 14,659 | 930,700 | |
| 2,055,690 | |||
| TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 3,604,910 | ||
| Internet Software & Services - 1.7% | |||
| Internet Software & Services - 1.7% | |||
| Alphabet, Inc.: | |||
| Class A (a) | 1,920 | 1,622,266 | |
| Class C (a) | 1,505 | 1,238,931 | |
| Web.com Group, Inc. (a) | 30,100 | 579,425 | |
| 3,440,622 | |||
| IT Services - 0.3% | |||
| IT Consulting & Other Services - 0.3% | |||
| Cognizant Technology Solutions Corp. Class A (a) | 9,550 | 566,029 | |
| Semiconductors & Semiconductor Equipment - 18.0% | |||
| Semiconductors - 18.0% | |||
| Acacia Communications, Inc. (b) | 7,800 | 405,210 | |
| Broadcom Ltd. | 6,773 | 1,428,629 | |
| Maxim Integrated Products, Inc. | 15,800 | 699,940 | |
| NXP Semiconductors NV (a) | 13,000 | 1,336,530 | |
| ON Semiconductor Corp. (a) | 39,200 | 593,096 | |
| Qualcomm, Inc. | 572,419 | 32,330,225 | |
| 36,793,630 | |||
| Software - 0.8% | |||
| Systems Software - 0.8% | |||
| Check Point Software Technologies Ltd. (a) | 16,600 | 1,641,906 | |
| Technology Hardware, Storage & Peripherals - 2.0% | |||
| Technology Hardware, Storage & Peripherals - 2.0% | |||
| Apple, Inc. | 1,800 | 246,582 | |
| BlackBerry Ltd. (a) | 279,890 | 1,945,027 | |
| HP, Inc. | 66,311 | 1,151,822 | |
| Samsung Electronics Co. Ltd. | 399 | 676,021 | |
| 4,019,452 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $168,503,233) | 202,367,759 | ||
| Money Market Funds - 5.4% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 2,416,025 | 2,416,508 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 8,745,257 | 8,747,006 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $11,162,410) | 11,163,514 | ||
| TOTAL INVESTMENT PORTFOLIO - 104.3% | |||
| (Cost $179,665,643) | 213,531,273 | ||
| NET OTHER ASSETS (LIABILITIES) - (4.3)% | (8,880,499) | ||
| NET ASSETS - 100% | $204,650,774 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements,which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $8,097 |
| Fidelity Securities Lending Cash Central Fund | 79,425 |
| Total | $87,522 |
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 84.6% |
| Sweden | 4.9% |
| Finland | 4.4% |
| Canada | 1.6% |
| United Kingdom | 1.3% |
| Israel | 1.3% |
| Others (Individually Less Than 1%) | 1.9% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Communications Equipment Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $8,171,421) — See accompanying schedule: Unaffiliated issuers (cost $168,503,233) | $202,367,759 | |
| Fidelity Central Funds (cost $11,162,410) | 11,163,514 | |
| Total Investments (cost $179,665,643) | $213,531,273 | |
| Receivable for investments sold | 607,100 | |
| Receivable for fund shares sold | 137,375 | |
| Dividends receivable | 357,129 | |
| Distributions receivable from Fidelity Central Funds | 3,094 | |
| Prepaid expenses | 651 | |
| Other receivables | 1,446 | |
| Total assets | 214,638,068 | |
| Liabilities | ||
| Payable for investments purchased | $432,365 | |
| Payable for fund shares redeemed | 633,435 | |
| Accrued management fee | 91,691 | |
| Other affiliated payables | 45,685 | |
| Other payables and accrued expenses | 38,568 | |
| Collateral on securities loaned | 8,745,550 | |
| Total liabilities | 9,987,294 | |
| Net Assets | $204,650,774 | |
| Net Assets consist of: | ||
| Paid in capital | $171,689,024 | |
| Undistributed net investment income | 455,888 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (1,360,213) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 33,866,075 | |
| Net Assets, for 5,997,784 shares outstanding | $204,650,774 | |
| Net Asset Value, offering price and redemption price per share ($204,650,774 ÷ 5,997,784 shares) | $34.12 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $3,952,772 | |
| Income from Fidelity Central Funds (including $79,425 from security lending) | 87,522 | |
| Total income | 4,040,294 | |
| Expenses | ||
| Management fee | $1,033,110 | |
| Transfer agent fees | 462,004 | |
| Accounting and security lending fees | 74,929 | |
| Custodian fees and expenses | 18,679 | |
| Independent trustees' fees and expenses | 4,144 | |
| Registration fees | 22,065 | |
| Audit | 41,530 | |
| Legal | 5,695 | |
| Miscellaneous | 2,475 | |
| Total expenses before reductions | 1,664,631 | |
| Expense reductions | (7,689) | 1,656,942 |
| Net investment income (loss) | 2,383,352 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 2,027,038 | |
| Fidelity Central Funds | 886 | |
| Foreign currency transactions | 229 | |
| Total net realized gain (loss) | 2,028,153 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 43,259,851 | |
| Assets and liabilities in foreign currencies | 1,098 | |
| Total change in net unrealized appreciation (depreciation) | 43,260,949 | |
| Net gain (loss) | 45,289,102 | |
| Net increase (decrease) in net assets resulting from operations | $47,672,454 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $2,383,352 | $2,221,388 |
| Net realized gain (loss) | 2,028,153 | 3,587,956 |
| Change in net unrealized appreciation (depreciation) | 43,260,949 | (44,367,927) |
| Net increase (decrease) in net assets resulting from operations | 47,672,454 | (38,558,583) |
| Distributions to shareholders from net investment income | (2,293,875) | (1,909,084) |
| Distributions to shareholders from net realized gain | – | (4,239,791) |
| Total distributions | (2,293,875) | (6,148,875) |
| Share transactions | ||
| Proceeds from sales of shares | 35,416,799 | 11,320,528 |
| Reinvestment of distributions | 2,137,643 | 5,866,394 |
| Cost of shares redeemed | (47,739,292) | (66,657,375) |
| Net increase (decrease) in net assets resulting from share transactions | (10,184,850) | (49,470,453) |
| Redemption fees | 2,519 | 1,390 |
| Total increase (decrease) in net assets | 35,196,248 | (94,176,521) |
| Net Assets | ||
| Beginning of period | 169,454,526 | 263,631,047 |
| End of period | $204,650,774 | $169,454,526 |
| Other Information | ||
| Undistributed net investment income end of period | $455,888 | $366,182 |
| Shares | ||
| Sold | 1,146,264 | 380,053 |
| Issued in reinvestment of distributions | 68,971 | 202,174 |
| Redeemed | (1,562,158) | (2,229,389) |
| Net increase (decrease) | (346,923) | (1,647,162) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Communications Equipment Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $26.71 | $32.99 | $31.24 | $24.31 | $24.50 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .38 | .31 | .28 | .18 | .14C |
| Net realized and unrealized gain (loss) | 7.39 | (5.64) | 3.52 | 6.95 | (.14)D |
| Total from investment operations | 7.77 | (5.33) | 3.80 | 7.13 | – |
| Distributions from net investment income | (.36) | (.30) | (.30) | (.20) | (.17) |
| Distributions from net realized gain | – | (.65) | (1.75) | – | – |
| Tax return of capital | – | – | – | – | (.02) |
| Total distributions | (.36) | (.95) | (2.05) | (.20) | (.19) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $34.12 | $26.71 | $32.99 | $31.24 | $24.31 |
| Total ReturnF | 29.24% | (16.38)% | 12.49% | 29.41% | .07%D |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .88% | .90% | .89% | .92% | .93% |
| Expenses net of fee waivers, if any | .88% | .89% | .89% | .92% | .93% |
| Expenses net of all reductions | .88% | .89% | .89% | .90% | .89% |
| Net investment income (loss) | 1.27% | 1.04% | .89% | .69% | .61%C |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $204,651 | $169,455 | $263,631 | $347,345 | $316,012 |
| Portfolio turnover rateI | 38% | 30% | 42%J | 65% | 54% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.10 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .18%.
D Net realized and unrealized gain (loss) per share reflects proceeds received from litigation which amounted to $.06 per share. Excluding these litigation proceeds, the total return would have been (.19)%.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Computers Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Computers Portfolio | 41.57% | 9.78% | 10.17% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Computers Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $26,331 | Computers Portfolio | |
| $20,834 | S&P 500® Index | |
Computers Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Christopher Lin: For the year, the fund returned 41.57%, topping the 38.97% gain of the S&P® Custom Computers & Peripherals Index and also besting the S&P 500®. Versus the S&P® industry index, stock selection in the fund’s core segment of technology hardware, storage & peripherals was the primary driver of its excess return. What we avoided or underweighted also was important. Pure Storage, which focuses on manufacturing storage devices for the fast-growing flash memory market, was the fund’s top relative contributor. We carried a zero weighting in this index name, and it returned -21% for the period. Supercomputer maker Cray, also a contributor, is another stock I underweighted to good effect, though I meaningfully increased this position for valuation reasons. Similar comments apply to Blackberry, which was in the process of shuttering its wireless handset business. I built a small stake here, beginning in April – again, mainly due to valuation. Also helpful was a sizable overweighting in Apple, by far the fund’s largest holding this period. Conversely, non-index exposure to internet software & services weighed on relative performance, as did a modest cash position. Two of the fund’s largest relative detractors were underweighted positions in the strong-performing shares of Seagate Technology and Western Digital, both makers of conventional hard-disk drives. I significantly increased our stake in Western Digital. That said, the fund’s largest relative detractor was a non-index position in internet-search giant Alphabet, among our largest holdings at period end.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: Due to new international benchmark guidelines, S&P® Dow Jones® indices has decided to stop offering its brand on custom benchmarks, effective March 31, 2017. As a temporary solution, on April 1, 2017, the fund’s industry benchmark name will change from S&P® Custom Computers & Peripherals Index to the Fidelity Computers and Peripherals Index. S&P® has agreed to continue calculating this index through June 30, after which the benchmark will change to the FactSet Computers Index. Fidelity believes that the new FactSet index will continue to provide shareholders with meaningful performance comparisons.Computers Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Apple, Inc. | 23.1 | 21.9 |
| HP, Inc. | 10.3 | 7.5 |
| Western Digital Corp. | 8.6 | 3.9 |
| Hewlett Packard Enterprise Co. | 7.4 | 4.8 |
| NCR Corp. | 4.8 | 3.1 |
| Facebook, Inc. Class A | 4.7 | 5.0 |
| Alphabet, Inc. Class A | 4.3 | 4.6 |
| Samsung Electronics Co. Ltd. | 4.0 | 0.0 |
| Cray, Inc. | 3.3 | 1.7 |
| Seagate Technology LLC | 3.3 | 4.9 |
| 73.8 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Technology Hardware, Storage & Peripherals | 77.9% | |
| Internet Software & Services | 9.3% | |
| IT Services | 4.7% | |
| Electronic Equipment & Components | 3.2% | |
| Semiconductors & Semiconductor Equipment | 1.7% | |
| All Others* | 3.2% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Technology Hardware, Storage & Peripherals | 72.0% | |
| Internet Software & Services | 12.5% | |
| IT Services | 8.0% | |
| Semiconductors & Semiconductor Equipment | 2.1% | |
| Internet & Catalog Retail | 0.4% | |
| All Others* | 5.0% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Computers Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 96.8% | |||
| Shares | Value | ||
| Electronic Equipment & Components - 3.2% | |||
| Technology Distributors - 3.2% | |||
| Dell Technologies, Inc. (a) | 236,910 | $15,041,416 | |
| Internet Software & Services - 9.3% | |||
| Internet Software & Services - 9.3% | |||
| Alphabet, Inc.: | |||
| Class A (a) | 23,900 | 20,193,827 | |
| Class C (a) | 1,957 | 1,611,022 | |
| Facebook, Inc. Class A (a) | 162,056 | 21,965,070 | |
| 43,769,919 | |||
| IT Services - 4.7% | |||
| Data Processing& Outsourced Services - 2.3% | |||
| MasterCard, Inc. Class A | 39,200 | 4,330,032 | |
| Visa, Inc. Class A | 73,700 | 6,481,178 | |
| 10,811,210 | |||
| IT Consulting & Other Services - 2.4% | |||
| IBM Corp. | 44,704 | 8,038,673 | |
| Teradata Corp. (a) | 112,157 | 3,488,083 | |
| 11,526,756 | |||
| TOTAL IT SERVICES | 22,337,966 | ||
| Semiconductors & Semiconductor Equipment - 1.7% | |||
| Semiconductors - 1.7% | |||
| Qualcomm, Inc. | 145,304 | 8,206,770 | |
| Technology Hardware, Storage & Peripherals - 77.9% | |||
| Technology Hardware, Storage & Peripherals - 77.9% | |||
| 3D Systems Corp. (a)(b) | 86,300 | 1,311,760 | |
| Apple, Inc. | 797,958 | 109,312,267 | |
| BlackBerry Ltd. (a) | 228,193 | 1,588,223 | |
| Canon, Inc. sponsored ADR (b) | 498,619 | 14,579,620 | |
| Cray, Inc. (a) | 749,164 | 15,620,069 | |
| Diebold Nixdorf, Inc. | 258,321 | 7,801,294 | |
| Eastman Kodak Co. (a) | 805,153 | 11,553,946 | |
| Electronics for Imaging, Inc. (a) | 38,259 | 1,762,592 | |
| Hewlett Packard Enterprise Co. | 1,527,056 | 34,847,418 | |
| HP, Inc. | 2,808,139 | 48,777,374 | |
| NCR Corp. (a) | 474,373 | 22,803,110 | |
| NetApp, Inc. | 288,816 | 12,081,173 | |
| Nimble Storage, Inc. (a) | 1,037,093 | 9,406,434 | |
| Samsung Electronics Co. Ltd. | 11,168 | 18,921,805 | |
| Seagate Technology LLC | 319,680 | 15,405,379 | |
| Super Micro Computer, Inc. (a) | 67,654 | 1,759,004 | |
| Western Digital Corp. | 530,542 | 40,788,069 | |
| 368,319,537 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $290,494,402) | 457,675,608 | ||
| Money Market Funds - 6.8% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 19,601,654 | 19,605,575 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 12,323,549 | 12,326,013 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $31,930,906) | 31,931,588 | ||
| TOTAL INVESTMENT PORTFOLIO - 103.6% | |||
| (Cost $322,425,308) | 489,607,196 | ||
| NET OTHER ASSETS (LIABILITIES) - (3.6)% | (16,861,932) | ||
| NET ASSETS - 100% | $472,745,264 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $47,724 |
| Fidelity Securities Lending Cash Central Fund | 85,162 |
| Total | $132,886 |
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 89.3% |
| Korea (South) | 4.0% |
| Ireland | 3.3% |
| Japan | 3.1% |
| Others (Individually Less Than 1%) | 0.3% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Computers Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $11,892,884) — See accompanying schedule: Unaffiliated issuers (cost $290,494,402) | $457,675,608 | |
| Fidelity Central Funds (cost $31,930,906) | 31,931,588 | |
| Total Investments (cost $322,425,308) | $489,607,196 | |
| Receivable for fund shares sold | 3,670,056 | |
| Dividends receivable | 542,233 | |
| Distributions receivable from Fidelity Central Funds | 15,423 | |
| Prepaid expenses | 1,418 | |
| Other receivables | 163,210 | |
| Total assets | 493,999,536 | |
| Liabilities | ||
| Payable for investments purchased | $8,363,003 | |
| Payable for fund shares redeemed | 216,912 | |
| Accrued management fee | 207,053 | |
| Other affiliated payables | 83,535 | |
| Other payables and accrued expenses | 58,519 | |
| Collateral on securities loaned | 12,325,250 | |
| Total liabilities | 21,254,272 | |
| Net Assets | $472,745,264 | |
| Net Assets consist of: | ||
| Paid in capital | $296,758,801 | |
| Undistributed net investment income | 95,841 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 8,801,975 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 167,088,647 | |
| Net Assets, for 5,695,059 shares outstanding | $472,745,264 | |
| Net Asset Value, offering price and redemption price per share ($472,745,264 ÷ 5,695,059 shares) | $83.01 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $7,353,324 | |
| Income from Fidelity Central Funds (including $85,162 from security lending) | 132,886 | |
| Total income | 7,486,210 | |
| Expenses | ||
| Management fee | $2,255,529 | |
| Transfer agent fees | 827,631 | |
| Accounting and security lending fees | 162,022 | |
| Custodian fees and expenses | 10,835 | |
| Independent trustees' fees and expenses | 9,044 | |
| Registration fees | 24,645 | |
| Audit | 43,110 | |
| Legal | 6,216 | |
| Miscellaneous | 6,401 | |
| Total expenses before reductions | 3,345,433 | |
| Expense reductions | (25,256) | 3,320,177 |
| Net investment income (loss) | 4,166,033 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 38,327,314 | |
| Fidelity Central Funds | 2,174 | |
| Foreign currency transactions | 10,008 | |
| Total net realized gain (loss) | 38,339,496 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 99,931,909 | |
| Assets and liabilities in foreign currencies | (12,358) | |
| Total change in net unrealized appreciation (depreciation) | 99,919,551 | |
| Net gain (loss) | 138,259,047 | |
| Net increase (decrease) in net assets resulting from operations | $142,425,080 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $4,166,033 | $5,381,423 |
| Net realized gain (loss) | 38,339,496 | 9,954,351 |
| Change in net unrealized appreciation (depreciation) | 99,919,551 | (148,535,635) |
| Net increase (decrease) in net assets resulting from operations | 142,425,080 | (133,199,861) |
| Distributions to shareholders from net investment income | (4,760,421) | (5,463,090) |
| Distributions to shareholders from net realized gain | (21,241,452) | (14,901,951) |
| Total distributions | (26,001,873) | (20,365,041) |
| Share transactions | ||
| Proceeds from sales of shares | 69,348,882 | 22,498,928 |
| Reinvestment of distributions | 24,823,963 | 19,596,807 |
| Cost of shares redeemed | (126,405,898) | (308,829,724) |
| Net increase (decrease) in net assets resulting from share transactions | (32,233,053) | (266,733,989) |
| Redemption fees | 1,604 | 805 |
| Total increase (decrease) in net assets | 84,191,758 | (420,298,086) |
| Net Assets | ||
| Beginning of period | 388,553,506 | 808,851,592 |
| End of period | $472,745,264 | $388,553,506 |
| Other Information | ||
| Undistributed net investment income end of period | $95,841 | $680,917 |
| Shares | ||
| Sold | 914,204 | 298,264 |
| Issued in reinvestment of distributions | 331,793 | 290,433 |
| Redeemed | (1,771,351) | (4,081,263) |
| Net increase (decrease) | (525,354) | (3,492,566) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Computers Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $62.46 | $83.28 | $75.46 | $64.51 | $64.89 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .73 | .69 | .45 | .59 | .18 |
| Net realized and unrealized gain (loss) | 24.69 | (18.42) | 9.61 | 15.76 | (.43) |
| Total from investment operations | 25.42 | (17.73) | 10.06 | 16.35 | (.25) |
| Distributions from net investment income | (.88) | (.80) | (.47) | (.53) | (.13) |
| Distributions from net realized gain | (4.00) | (2.29) | (1.77) | (4.87) | – |
| Total distributions | (4.87)C | (3.09) | (2.24) | (5.40) | (.13) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $83.01 | $62.46 | $83.28 | $75.46 | $64.51 |
| Total ReturnE | 41.57% | (21.56)% | 13.36% | 27.13% | (.38)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .81% | .80% | .80% | .82% | .85% |
| Expenses net of fee waivers, if any | .81% | .80% | .80% | .82% | .85% |
| Expenses net of all reductions | .81% | .79% | .80% | .82% | .82% |
| Net investment income (loss) | 1.01% | .91% | .57% | .86% | .29% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $472,745 | $388,554 | $808,852 | $679,323 | $687,105 |
| Portfolio turnover rateH | 49% | 31% | 46% | 35% | 184% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of 4.87 per share is comprised of distributions from net investment income of $.879 and distributions from net realized gain of $3.995 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
IT Services Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| IT Services Portfolio | 21.05% | 17.31% | 13.42% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in IT Services Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $35,229 | IT Services Portfolio | |
| $20,834 | S&P 500® Index | |
IT Services Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Daniel Sherwood: For the year, the fund returned 21.05%, trailing the 26.08% gain of the MSCI U.S. IMI Information Technology Services 25/50 Index, and also lagging the S&P 500®. Versus the MSCI industry index, unfavorable stock selection in the IT consulting & other services space – including a large underweighting in index heavyweight IBM, by far the fund’s largest relative detractor – was responsible for the vast majority of its lagging performance. Despite continued earnings degradation at the company, investors’ thirst for low-volatility, high-dividend stocks contributed to IBM’s relatively strong performance this period. Several overweighted or out-of-index positions in IT consulting & other services also weighed on relative results, including Cognizant Technology Solutions, Epam Systems and Luxoft Holding. Meanwhile, Computer Sciences detracted because we underweighted it, and the stock notched a robust 141% return. I lessened the fund’s underweighting here. A non-index position in web-hosting provider Endurance International Group Holdings also worked against us. Conversely, modest exposure to several out-of-index groups added a little value. Research & consulting services was home to the fund’s top relative contributor: ICF International, which offers a variety of professional services and technology-based solutions to government and commercial clients. Also lifting the fund’s relative result was non-index exposure to web-hosting provider Wix.com and TriNet Group, a supplier of cloud-based human resources software and services for small and medium-sized businesses.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On December 31, 2016, Daniel Sherwood became sole Portfolio Manager of the fund, after having served as Co-Portfolio Manager with Kyle Weaver since October 1, 2016.IT Services Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Visa, Inc. Class A | 17.5 | 15.8 |
| MasterCard, Inc. Class A | 10.9 | 9.2 |
| Cognizant Technology Solutions Corp. Class A | 7.2 | 7.7 |
| Accenture PLC Class A | 5.5 | 5.9 |
| IBM Corp. | 5.2 | 3.8 |
| Alliance Data Systems Corp. | 4.6 | 6.1 |
| PayPal Holdings, Inc. | 4.3 | 3.8 |
| EPAM Systems, Inc. | 3.9 | 4.3 |
| Fidelity National Information Services, Inc. | 3.8 | 3.9 |
| Global Payments, Inc. | 2.9 | 2.2 |
| 65.8 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| IT Services | 95.9% | |
| Internet Software & Services | 2.5% | |
| Electronic Equipment & Components | 0.5% | |
| Software | 0.3% | |
| All Others* | 0.8% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| IT Services | 92.5% | |
| Internet Software & Services | 4.9% | |
| Professional Services | 1.8% | |
| Electronic Equipment & Components | 0.5% | |
| Software | 0.4% | |
| All Others*,** | (0.1)% | |
* Not included in the pie chart
** Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
IT Services Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 99.2% | |||
| Shares | Value | ||
| Electronic Equipment & Components - 0.5% | |||
| Electronic Manufacturing Services - 0.5% | |||
| Cardtronics PLC | 207,400 | $9,142,192 | |
| Internet Software & Services - 2.5% | |||
| Internet Software & Services - 2.5% | |||
| Endurance International Group Holdings, Inc. (a) | 1,831,169 | 15,564,937 | |
| GoDaddy, Inc. (a)(b) | 595,827 | 21,956,225 | |
| Rightside Group Ltd. (a) | 9,454 | 79,319 | |
| Web.com Group, Inc. (a) | 8 | 154 | |
| Wix.com Ltd. (a) | 62,317 | 3,882,349 | |
| 41,482,984 | |||
| IT Services - 95.9% | |||
| Data Processing & Outsourced Services - 63.0% | |||
| Alliance Data Systems Corp. | 312,248 | 75,870,019 | |
| Amadeus IT Holding SA Class A | 800 | 37,210 | |
| Automatic Data Processing, Inc. | 390,118 | 40,033,909 | |
| Black Knight Financial Services, Inc. Class A (a) | 30,800 | 1,185,800 | |
| Broadridge Financial Solutions, Inc. | 7,800 | 540,774 | |
| Cass Information Systems, Inc. | 1,852 | 120,695 | |
| Convergys Corp. | 85,000 | 1,859,800 | |
| CoreLogic, Inc. (a) | 169,700 | 6,650,543 | |
| CSG Systems International, Inc. | 97,770 | 3,853,116 | |
| DST Systems, Inc. | 40,600 | 4,855,760 | |
| Euronet Worldwide, Inc. (a) | 187,000 | 15,479,860 | |
| Everi Holdings, Inc. (a) | 837,500 | 2,721,875 | |
| EVERTEC, Inc. | 403,700 | 6,802,345 | |
| ExlService Holdings, Inc. (a) | 346,070 | 15,455,486 | |
| Fidelity National Information Services, Inc. | 762,300 | 62,714,421 | |
| First Data Corp. Class A (a) | 687,700 | 11,071,970 | |
| Fiserv, Inc. (a) | 249,300 | 28,769,220 | |
| FleetCor Technologies, Inc. (a) | 191,000 | 32,470,000 | |
| Genpact Ltd. | 173,000 | 4,193,520 | |
| Global Payments, Inc. | 594,981 | 47,414,036 | |
| Jack Henry & Associates, Inc. | 1,600 | 150,032 | |
| MasterCard, Inc. Class A | 1,643,600 | 181,552,056 | |
| Maximus, Inc. | 167,400 | 9,988,758 | |
| MoneyGram International, Inc. (a) | 36,449 | 465,089 | |
| Paychex, Inc. | 1,800 | 110,556 | |
| PayPal Holdings, Inc. (a) | 1,715,800 | 72,063,600 | |
| Sabre Corp. | 913,200 | 20,008,212 | |
| Sykes Enterprises, Inc. (a) | 37,200 | 1,012,584 | |
| Syntel, Inc. | 82,500 | 1,459,425 | |
| Teletech Holdings, Inc. | 2,000 | 60,600 | |
| The Western Union Co. | 5,100 | 100,164 | |
| Total System Services, Inc. | 462,200 | 25,180,656 | |
| Travelport Worldwide Ltd. | 956,924 | 12,152,935 | |
| Vantiv, Inc. (a) | 328,900 | 21,503,482 | |
| Visa, Inc. Class A | 3,318,348 | 291,815,521 | |
| WEX, Inc. (a) | 139,400 | 15,505,462 | |
| WNS Holdings Ltd. sponsored ADR (a) | 1,144,192 | 32,323,424 | |
| 1,047,552,915 | |||
| IT Consulting & Other Services - 32.9% | |||
| Accenture PLC Class A | 738,100 | 90,417,250 | |
| Acxiom Corp. (a) | 6,100 | 173,972 | |
| Booz Allen Hamilton Holding Corp. Class A | 992,300 | 35,494,571 | |
| CACI International, Inc. Class A (a) | 11,800 | 1,479,720 | |
| Capgemini SA | 265,500 | 22,740,632 | |
| Cognizant Technology Solutions Corp. Class A (a) | 2,027,732 | 120,183,676 | |
| Computer Sciences Corp. | 226,600 | 15,535,696 | |
| CSRA, Inc. | 52,900 | 1,577,478 | |
| EPAM Systems, Inc. (a) | 887,400 | 65,339,262 | |
| Forrester Research, Inc. | 94,041 | 3,432,497 | |
| Gartner, Inc. (a) | 150,176 | 15,499,665 | |
| IBM Corp. | 479,150 | 86,160,753 | |
| Leidos Holdings, Inc. | 27,525 | 1,467,083 | |
| Luxoft Holding, Inc. (a) | 657,850 | 38,582,903 | |
| Perficient, Inc. (a) | 28,300 | 514,211 | |
| Science Applications International Corp. | 68,000 | 5,913,960 | |
| Teradata Corp. (a) | 3,500 | 108,850 | |
| Unisys Corp. (a) | 273,390 | 3,800,121 | |
| Virtusa Corp. (a) | 1,278,870 | 39,657,759 | |
| 548,080,059 | |||
| TOTAL IT SERVICES | 1,595,632,974 | ||
| Professional Services - 0.0% | |||
| Research & Consulting Services - 0.0% | |||
| ICF International, Inc. (a) | 11 | 472 | |
| Software - 0.3% | |||
| Application Software - 0.3% | |||
| Globant SA (a)(b) | 136,171 | 4,943,007 | |
| TOTAL COMMON STOCKS | |||
| (Cost $1,136,716,587) | 1,651,201,629 | ||
| Money Market Funds - 1.9% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 6,115,908 | 6,117,131 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 25,185,665 | 25,190,702 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $31,305,153) | 31,307,833 | ||
| TOTAL INVESTMENT PORTFOLIO - 101.1% | |||
| (Cost $1,168,021,740) | 1,682,509,462 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.1)% | (18,707,870) | ||
| NET ASSETS - 100% | $1,663,801,592 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $28,162 |
| Fidelity Securities Lending Cash Central Fund | 203,003 |
| Total | $231,165 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $1,651,201,629 | $1,628,460,997 | $22,740,632 | $-- |
| Money Market Funds | 31,307,833 | 31,307,833 | -- | -- |
| Total Investments in Securities: | $1,682,509,462 | $1,659,768,830 | $22,740,632 | $-- |
The following is a summary of transfers between Level 1 and Level 2 for the period ended February 28, 2017. Transfers are assumed to have occurred at the beginning of the period, and are primarily attributable to the valuation techniques used for foreign equity securities, as discussed in the accompanying Notes to Financial Statements:
| Transfers | Total |
| Level 1 to Level 2 | $19,466,108 |
| Level 2 to Level 1 | $0 |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 86.4% |
| Ireland | 5.5% |
| British Virgin Islands | 2.3% |
| Bailiwick of Jersey | 2.0% |
| France | 1.4% |
| Bermuda | 1.0% |
| Others (Individually Less Than 1%) | 1.4% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
IT Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $24,398,605) — See accompanying schedule: Unaffiliated issuers (cost $1,136,716,587) | $1,651,201,629 | |
| Fidelity Central Funds (cost $31,305,153) | 31,307,833 | |
| Total Investments (cost $1,168,021,740) | $1,682,509,462 | |
| Cash | 715 | |
| Receivable for investments sold | 15,668,367 | |
| Receivable for fund shares sold | 1,426,620 | |
| Dividends receivable | 1,273,203 | |
| Distributions receivable from Fidelity Central Funds | 6,847 | |
| Prepaid expenses | 6,993 | |
| Other receivables | 23,294 | |
| Total assets | 1,700,915,501 | |
| Liabilities | ||
| Payable for investments purchased | $7,718,295 | |
| Payable for fund shares redeemed | 3,111,728 | |
| Accrued management fee | 747,224 | |
| Other affiliated payables | 312,349 | |
| Other payables and accrued expenses | 38,913 | |
| Collateral on securities loaned | 25,185,400 | |
| Total liabilities | 37,113,909 | |
| Net Assets | $1,663,801,592 | |
| Net Assets consist of: | ||
| Paid in capital | $1,138,273,456 | |
| Accumulated net investment loss | (93,249) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 11,141,446 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 514,479,939 | |
| Net Assets, for 37,108,114 shares outstanding | $1,663,801,592 | |
| Net Asset Value, offering price and redemption price per share ($1,663,801,592 ÷ 37,108,114 shares) | $44.84 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $14,559,464 | |
| Special dividends | 5,625,665 | |
| Income from Fidelity Central Funds (including $203,003 from security lending) | 231,165 | |
| Total income | 20,416,294 | |
| Expenses | ||
| Management fee | $10,029,528 | |
| Transfer agent fees | 3,612,562 | |
| Accounting and security lending fees | 570,845 | |
| Custodian fees and expenses | 34,468 | |
| Independent trustees' fees and expenses | 40,621 | |
| Registration fees | 55,168 | |
| Audit | 50,723 | |
| Legal | 32,558 | |
| Interest | 10,240 | |
| Miscellaneous | 22,036 | |
| Total expenses before reductions | 14,458,749 | |
| Expense reductions | (49,743) | 14,409,006 |
| Net investment income (loss) | 6,007,288 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 44,118,879 | |
| Fidelity Central Funds | 2,683 | |
| Foreign currency transactions | (4,897) | |
| Total net realized gain (loss) | 44,116,665 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 293,487,375 | |
| Assets and liabilities in foreign currencies | 383 | |
| Total change in net unrealized appreciation (depreciation) | 293,487,758 | |
| Net gain (loss) | 337,604,423 | |
| Net increase (decrease) in net assets resulting from operations | $343,611,711 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $6,007,288 | $(901,041) |
| Net realized gain (loss) | 44,116,665 | (25,348) |
| Change in net unrealized appreciation (depreciation) | 293,487,758 | (87,800,669) |
| Net increase (decrease) in net assets resulting from operations | 343,611,711 | (88,727,058) |
| Distributions to shareholders from net investment income | (5,197,978) | – |
| Distributions to shareholders from net realized gain | – | (49,044,175) |
| Total distributions | (5,197,978) | (49,044,175) |
| Share transactions | ||
| Proceeds from sales of shares | 375,114,434 | 1,630,756,010 |
| Reinvestment of distributions | 4,954,736 | 47,070,205 |
| Cost of shares redeemed | (948,883,745) | (588,015,383) |
| Net increase (decrease) in net assets resulting from share transactions | (568,814,575) | 1,089,810,832 |
| Redemption fees | 27,362 | 137,784 |
| Total increase (decrease) in net assets | (230,373,480) | 952,177,383 |
| Net Assets | ||
| Beginning of period | 1,894,175,072 | 941,997,689 |
| End of period | $1,663,801,592 | $1,894,175,072 |
| Other Information | ||
| Accumulated net investment loss end of period | $(93,249) | $(930,621) |
| Shares | ||
| Sold | 9,254,539 | 40,832,843 |
| Issued in reinvestment of distributions | 117,858 | 1,210,538 |
| Redeemed | (23,235,605) | (15,298,511) |
| Net increase (decrease) | (13,863,208) | 26,744,870 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — IT Services Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $37.16 | $38.88 | $37.86 | $27.53 | $23.77 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .13C | (.02) | (.03) | (.03) | (.02)D |
| Net realized and unrealized gain (loss) | 7.68 | (.15) | 4.06 | 11.42 | 4.08 |
| Total from investment operations | 7.81 | (.17) | 4.03 | 11.39 | 4.06 |
| Distributions from net investment income | (.13) | – | (.01) | – | – |
| Distributions from net realized gain | – | (1.55) | (3.01) | (1.06) | (.30) |
| Total distributions | (.13) | (1.55) | (3.01)E | (1.06) | (.30) |
| Redemption fees added to paid in capitalB,F | – | – | – | – | – |
| Net asset value, end of period | $44.84 | $37.16 | $38.88 | $37.86 | $27.53 |
| Total ReturnG | 21.05% | (.59)% | 11.16% | 41.66% | 17.22% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .79% | .81% | .81% | .84% | .86% |
| Expenses net of fee waivers, if any | .79% | .81% | .81% | .84% | .86% |
| Expenses net of all reductions | .79% | .80% | .81% | .83% | .85% |
| Net investment income (loss) | .33%C | (.06)% | (.07)% | (.09)% | (.09)%D |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,663,802 | $1,894,175 | $941,998 | $1,653,572 | $470,962 |
| Portfolio turnover rateJ | 27% | 24% | 56% | 74% | 107% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net Investment income per share reflects a large, non-recurring dividend which amounted to $.13 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been .02%.
D Net Investment income per share reflects a large, non-recurring dividend which amounted to $.02 per share. Excluding this non-recurring dividend, the ratio of net investment income (loss) to average net assets would have been (.19) %.
E Total distributions of $3.01 per share is comprised of distributions from net investment income of $.005 and distributions from net realized gain of $3.009 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Semiconductors Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Semiconductors Portfolio | 51.79% | 18.88% | 10.93% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Semiconductors Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $28,213 | Semiconductors Portfolio | |
| $20,834 | S&P 500® Index | |
Semiconductors Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Stephen Barwikowski: For the year, the fund returned 51.79%, topping the 49.09% gain of the surging MSCI U.S. IMI Semiconductors & Semiconductor Equipment 25/50 Index and also outpacing the S&P 500®. Versus the MSCI industry index, stock selection in the fund’s core category of semiconductors added the most value this period. Picks in semiconductor equipment also contributed and nearly offset the negative impact of underweighting this strong-performing group. At the stock level, two out-of-index positions figured among our top relative contributors: Netherlands-based NXP Semiconductors and TTM Technologies. NXP was the top relative contributor, aided by our timely exposure to this leading supplier of chips for the automotive market. Our position in TTM, one of the world’s largest makers of printed-circuit boards, more than doubled this period. I reduced the position as the stock rallied, eliminating it in September. Overweightings in ON Semiconductor and Semtech also worked well, as did sidestepping First Solar, an index name and maker of solar modules using thin-film semiconductor technology that lost roughly half of its value this period. Conversely, our largest individual relative detractor was a sizable underweighting in graphics-processor designer Nvidia, which posted a 226% return. Another stock exposed to some of the same markets as Nvidia was Advanced Micro Devices, which also detracted because I underweighted it and ultimately sold the stock from the fund. Wireless infrastructure maker Qualcomm, the fund’s second-largest holding at period end, was a large overweighting that worked against us. A cash position averaging roughly 4% of the fund’s net assets also was a meaningful drag on performance this period.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Semiconductors Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Intel Corp. | 22.4 | 17.5 |
| Qualcomm, Inc. | 14.3 | 12.4 |
| Broadcom Ltd. | 8.0 | 8.4 |
| Analog Devices, Inc. | 4.9 | 5.5 |
| Micron Technology, Inc. | 4.5 | 3.1 |
| Applied Materials, Inc. | 4.2 | 4.5 |
| Marvell Technology Group Ltd. | 3.4 | 1.2 |
| ON Semiconductor Corp. | 3.0 | 4.2 |
| NXP Semiconductors NV | 2.9 | 3.9 |
| Maxim Integrated Products, Inc. | 2.7 | 3.4 |
| 70.3 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Semiconductors & Semiconductor Equipment | 88.0% | |
| Electronic Equipment & Components | 3.8% | |
| Internet Software & Services | 2.1% | |
| Technology Hardware, Storage & Peripherals | 1.4% | |
| Commercial Services & Supplies | 0.6% | |
| All Others* | 4.1% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Semiconductors & Semiconductor Equipment | 76.6% | |
| Diversified Financial Services | 8.4% | |
| Electronic Equipment & Components | 5.9% | |
| Technology Hardware, Storage & Peripherals | 2.0% | |
| Commercial Services & Supplies | 0.7% | |
| All Others* | 6.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Semiconductors Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 96.8% | |||
| Shares | Value | ||
| Biotechnology - 0.0% | |||
| Biotechnology - 0.0% | |||
| Arrowhead Pharmaceuticals, Inc. warrants 5/21/17 (a) | 285,468 | $3 | |
| Commercial Services & Supplies - 0.6% | |||
| Office Services & Supplies - 0.6% | |||
| West Corp. | 773,400 | 18,491,994 | |
| Communications Equipment - 0.2% | |||
| Communications Equipment - 0.2% | |||
| Parrot SA (a)(b) | 502,200 | 4,479,698 | |
| Electronic Equipment & Components - 3.8% | |||
| Electronic Manufacturing Services - 2.4% | |||
| Jabil Circuit, Inc. | 2,867,855 | 73,158,981 | |
| Technology Distributors - 1.4% | |||
| Arrow Electronics, Inc. (a) | 81,300 | 5,869,860 | |
| Avnet, Inc. | 592,100 | 27,283,968 | |
| Tech Data Corp. (a) | 105,800 | 9,204,600 | |
| 42,358,428 | |||
| TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 115,517,409 | ||
| Industrial Conglomerates - 0.4% | |||
| Industrial Conglomerates - 0.4% | |||
| Toshiba Corp. (a) | 7,076,000 | 13,113,385 | |
| Internet Software & Services - 2.1% | |||
| Internet Software & Services - 2.1% | |||
| Alphabet, Inc. Class A (a) | 74,050 | 62,567,067 | |
| IT Services - 0.3% | |||
| Data Processing & Outsourced Services - 0.3% | |||
| EVERTEC, Inc. | 101,212 | 1,705,422 | |
| Sabre Corp. | 213,200 | 4,671,212 | |
| Travelport Worldwide Ltd. | 231,200 | 2,936,240 | |
| 9,312,874 | |||
| Semiconductors & Semiconductor Equipment - 88.0% | |||
| Semiconductor Equipment - 6.1% | |||
| Applied Materials, Inc. | 3,494,700 | 126,578,034 | |
| Lam Research Corp. | 456,473 | 54,110,309 | |
| Xcerra Corp. (a) | 350,900 | 3,066,866 | |
| 183,755,209 | |||
| Semiconductors - 81.9% | |||
| Acacia Communications, Inc. (b) | 207,700 | 10,790,015 | |
| Ambarella, Inc. (a)(b) | 91,200 | 5,376,240 | |
| ams AG | 99,100 | 4,578,324 | |
| Analog Devices, Inc. | 1,815,589 | 148,751,207 | |
| Broadcom Ltd. | 1,144,500 | 241,409,385 | |
| Cavium, Inc. (a) | 495,600 | 32,466,756 | |
| Cirrus Logic, Inc. (a) | 189,900 | 10,269,792 | |
| Cree, Inc. (a)(b) | 894,700 | 24,282,158 | |
| Cypress Semiconductor Corp. | 620,700 | 8,236,689 | |
| Diodes, Inc. (a) | 558,994 | 13,343,187 | |
| Himax Technologies, Inc. sponsored ADR (b) | 1,414,941 | 9,593,300 | |
| Integrated Device Technology, Inc. (a) | 1,250,255 | 29,893,597 | |
| Intel Corp. | 18,659,671 | 675,480,090 | |
| Linear Technology Corp. | 997,300 | 64,405,634 | |
| Marvell Technology Group Ltd. | 6,491,296 | 101,264,218 | |
| Maxim Integrated Products, Inc. | 1,864,625 | 82,602,888 | |
| Mellanox Technologies Ltd. (a) | 665,000 | 32,186,000 | |
| Microchip Technology, Inc. | 547,700 | 39,719,204 | |
| Micron Technology, Inc. (a) | 5,735,540 | 134,441,058 | |
| NVIDIA Corp. | 506,492 | 51,398,808 | |
| NXP Semiconductors NV (a) | 835,504 | 85,898,166 | |
| ON Semiconductor Corp. (a) | 5,939,846 | 89,869,870 | |
| Qorvo, Inc. (a) | 808,328 | 53,430,481 | |
| Qualcomm, Inc. | 7,645,084 | 431,794,344 | |
| Semtech Corp. (a) | 1,585,175 | 53,024,104 | |
| Skyworks Solutions, Inc. | 220,220 | 20,879,058 | |
| Synaptics, Inc. (a) | 196,800 | 10,459,920 | |
| 2,465,844,493 | |||
| TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 2,649,599,702 | ||
| Technology Hardware, Storage & Peripherals - 1.4% | |||
| Technology Hardware, Storage & Peripherals - 1.4% | |||
| Cray, Inc. (a) | 182,500 | 3,805,125 | |
| Lenovo Group Ltd. | 29,322,000 | 17,601,736 | |
| Nimble Storage, Inc. (a) | 605,300 | 5,490,071 | |
| Samsung Electronics Co. Ltd. | 8,881 | 15,046,969 | |
| 41,943,901 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $2,404,591,496) | 2,915,026,033 | ||
| Money Market Funds - 3.9% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 81,256,561 | 81,272,813 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 38,007,385 | 38,014,986 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $119,273,047) | 119,287,799 | ||
| TOTAL INVESTMENT PORTFOLIO - 100.7% | |||
| (Cost $2,523,864,543) | 3,034,313,832 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.7)% | (21,942,314) | ||
| NET ASSETS - 100% | $3,012,371,518 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $410,090 |
| Fidelity Securities Lending Cash Central Fund | 262,996 |
| Total | $673,086 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $2,915,026,033 | $2,915,026,030 | $3 | $-- |
| Money Market Funds | 119,287,799 | 119,287,799 | -- | -- |
| Total Investments in Securities: | $3,034,313,832 | $3,034,313,829 | $3 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 82.0% |
| Singapore | 8.0% |
| Bermuda | 3.5% |
| Netherlands | 2.9% |
| Israel | 1.1% |
| Others (Individually Less Than 1%) | 2.5% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Semiconductors Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $36,237,861) — See accompanying schedule: Unaffiliated issuers (cost $2,404,591,496) | $2,915,026,033 | |
| Fidelity Central Funds (cost $119,273,047) | 119,287,799 | |
| Total Investments (cost $2,523,864,543) | $3,034,313,832 | |
| Cash | 2,253,636 | |
| Receivable for investments sold | 37,632,474 | |
| Receivable for fund shares sold | 8,093,944 | |
| Dividends receivable | 11,173,884 | |
| Distributions receivable from Fidelity Central Funds | 104,742 | |
| Prepaid expenses | 5,897 | |
| Other receivables | 159,864 | |
| Total assets | 3,093,738,273 | |
| Liabilities | ||
| Payable for investments purchased | $35,847,330 | |
| Payable for fund shares redeemed | 5,564,098 | |
| Accrued management fee | 1,341,660 | |
| Other affiliated payables | 451,613 | |
| Other payables and accrued expenses | 156,135 | |
| Collateral on securities loaned | 38,005,919 | |
| Total liabilities | 81,366,755 | |
| Net Assets | $3,012,371,518 | |
| Net Assets consist of: | ||
| Paid in capital | $2,423,973,234 | |
| Undistributed net investment income | 7,126,004 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 70,827,385 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 510,444,895 | |
| Net Assets, for 29,755,099 shares outstanding | $3,012,371,518 | |
| Net Asset Value, offering price and redemption price per share ($3,012,371,518 ÷ 29,755,099 shares) | $101.24 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $37,485,680 | |
| Interest | 207,129 | |
| Income from Fidelity Central Funds (including $262,996 from security lending) | 673,086 | |
| Total income | 38,365,895 | |
| Expenses | ||
| Management fee | $10,894,103 | |
| Transfer agent fees | 3,329,848 | |
| Accounting and security lending fees | 613,652 | |
| Custodian fees and expenses | 76,195 | |
| Independent trustees' fees and expenses | 41,195 | |
| Appreciation in deferred trustee compensation account | 233 | |
| Registration fees | 157,969 | |
| Audit | 44,750 | |
| Legal | 23,867 | |
| Miscellaneous | 22,638 | |
| Total expenses before reductions | 15,204,450 | |
| Expense reductions | (300,547) | 14,903,903 |
| Net investment income (loss) | 23,461,992 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 153,357,500 | |
| Fidelity Central Funds | 15,058 | |
| Foreign currency transactions | 31,604 | |
| Total net realized gain (loss) | 153,404,162 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 608,451,298 | |
| Assets and liabilities in foreign currencies | (1,155) | |
| Total change in net unrealized appreciation (depreciation) | 608,450,143 | |
| Net gain (loss) | 761,854,305 | |
| Net increase (decrease) in net assets resulting from operations | $785,316,297 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $23,461,992 | $15,551,549 |
| Net realized gain (loss) | 153,404,162 | 103,884,648 |
| Change in net unrealized appreciation (depreciation) | 608,450,143 | (339,855,348) |
| Net increase (decrease) in net assets resulting from operations | 785,316,297 | (220,419,151) |
| Distributions to shareholders from net investment income | (16,885,913) | (15,827,117) |
| Distributions to shareholders from net realized gain | (60,751,043) | (235,831,061) |
| Total distributions | (77,636,956) | (251,658,178) |
| Share transactions | ||
| Proceeds from sales of shares | 1,421,320,708 | 258,847,468 |
| Reinvestment of distributions | 74,398,178 | 240,283,384 |
| Cost of shares redeemed | (529,318,580) | (1,083,972,350) |
| Net increase (decrease) in net assets resulting from share transactions | 966,400,306 | (584,841,498) |
| Redemption fees | 116,895 | 54,935 |
| Total increase (decrease) in net assets | 1,674,196,542 | (1,056,863,892) |
| Net Assets | ||
| Beginning of period | 1,338,174,976 | 2,395,038,868 |
| End of period | $3,012,371,518 | $1,338,174,976 |
| Other Information | ||
| Undistributed net investment income end of period | $7,126,004 | $902,519 |
| Shares | ||
| Sold | 15,698,643 | 3,158,007 |
| Issued in reinvestment of distributions | 948,917 | 2,946,726 |
| Redeemed | (6,043,951) | (13,726,287) |
| Net increase (decrease) | 10,603,609 | (7,621,554) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Semiconductors Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $69.87 | $89.46 | $68.32 | $49.82 | $53.29 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | 1.03 | .70 | .47 | .36 | .17 |
| Net realized and unrealized gain (loss) | 33.98 | (8.79) | 23.21 | 18.53 | (3.49) |
| Total from investment operations | 35.01 | (8.09) | 23.68 | 18.89 | (3.32) |
| Distributions from net investment income | (.68) | (.83) | (.45) | (.32) | (.15) |
| Distributions from net realized gain | (2.98) | (10.68) | (2.10) | (.06) | – |
| Total distributions | (3.65)C | (11.50)D | (2.55) | (.39)E | (.15) |
| Redemption fees added to paid in capitalB | .01 | –F | .01 | –F | –F |
| Net asset value, end of period | $101.24 | $69.87 | $89.46 | $68.32 | $49.82 |
| Total ReturnG | 51.79% | (10.44)% | 34.91% | 38.01% | (6.20)% |
| Ratios to Average Net AssetsH,I | |||||
| Expenses before reductions | .77% | .77% | .78% | .82% | .84% |
| Expenses net of fee waivers, if any | .77% | .77% | .78% | .82% | .84% |
| Expenses net of all reductions | .75% | .74% | .77% | .79% | .82% |
| Net investment income (loss) | 1.19% | .88% | .61% | .63% | .36% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $3,012,372 | $1,338,175 | $2,395,039 | $1,253,853 | $953,784 |
| Portfolio turnover rateJ | 110% | 179% | 132%K | 186% | 118% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $.3.65 per share is comprised of distributions from net investment income of $.676 and distributions from net realized gain of $2.975 per share.
D Total distributions of $11.50 per share is comprised of distributions from net investment income of $.825 and distributions from net realized gain of $10.678 per share.
E Total distributions of $.39 per share is comprised of distributions from net investment income of $.322 and distributions from net realized gain of $.064 per share.
F Amount represents less than $.005 per share.
G Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
H Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
I Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
J Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Software and IT Services Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Software and IT Services Portfolio | 31.83% | 17.29% | 13.75% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Software and IT Services Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $36,257 | Software and IT Services Portfolio | |
| $20,834 | S&P 500® Index | |
Software and IT Services Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Ali Khan: For the year, the fund rose 31.83%, strongly outpacing the 27.17% result of the MSCI U.S. IMI Software & Services 25/50 Index, and surpassing the S&P 500®. Versus the MSCI index, stock selection drove outperformance, especially within the internet software & services segment. Acquisitions helped lift the industry’s performance, and the fund’s top three individual contributors on a relative basis – Demandware, LinkedIn and NetSuite – were acquired during the reporting period. Elsewhere, our underweighting in database, middleware and applications provider Oracle buoyed the fund’s relative result because it lagged the MSCI index. Conversely, an out-of-index position in travel-review and booking site TripAdvisor dragged on the fund’s return. After showing some weakness in its core review business in recent quarterly reports, among other challenges to its new business model, the stock dipped. Underweighting technology and consulting company IBM also hurt, but to a slightly lesser extent. IBM's shares held up better than expected as investors sought stability around the time of the U.S. presidential election.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Software and IT Services Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Microsoft Corp. | 12.7 | 9.7 |
| Facebook, Inc. Class A | 11.6 | 10.6 |
| Alphabet, Inc. Class C | 10.4 | 10.0 |
| Alphabet, Inc. Class A | 9.1 | 8.5 |
| Visa, Inc. Class A | 5.8 | 6.0 |
| MasterCard, Inc. Class A | 3.9 | 4.2 |
| Adobe Systems, Inc. | 3.7 | 2.6 |
| Salesforce.com, Inc. | 3.0 | 2.4 |
| Cognizant Technology Solutions Corp. Class A | 2.5 | 2.1 |
| PayPal Holdings, Inc. | 2.1 | 0.9 |
| 64.8 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Internet Software & Services | 37.1% | |
| Software | 31.2% | |
| IT Services | 22.3% | |
| Internet & Direct Marketing Retail | 2.4% | |
| Electronic Equipment & Components | 1.2% | |
| All Others* | 5.8% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Internet Software & Services | 38.8% | |
| Software | 27.8% | |
| IT Services | 22.3% | |
| Internet & Catalog Retail | 3.0% | |
| Technology Hardware, Storage & Peripherals | 1.4% | |
| All Others* | 6.7% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Software and IT Services Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 95.9% | |||
| Shares | Value | ||
| Electronic Equipment & Components - 1.2% | |||
| Technology Distributors - 1.2% | |||
| Dell Technologies, Inc. (a) | 781,000 | $49,585,690 | |
| Health Care Technology - 0.3% | |||
| Health Care Technology - 0.3% | |||
| Inovalon Holdings, Inc. Class A (a)(b) | 910,900 | 10,930,800 | |
| Internet & Direct Marketing Retail - 2.4% | |||
| Internet & Direct Marketing Retail - 2.4% | |||
| Amazon.com, Inc. (a) | 58,500 | 49,434,840 | |
| TripAdvisor, Inc. (a) | 1,194,400 | 49,531,768 | |
| 98,966,608 | |||
| Internet Software & Services - 37.1% | |||
| Internet Software & Services - 37.1% | |||
| Actua Corp. (a) | 416,889 | 5,711,379 | |
| Akamai Technologies, Inc. (a) | 1,346,100 | 84,265,860 | |
| Alphabet, Inc.: | |||
| Class A (a) | 447,200 | 377,852,696 | |
| Class C (a) | 523,360 | 430,835,186 | |
| Bazaarvoice, Inc. (a) | 1,417,100 | 6,306,095 | |
| Endurance International Group Holdings, Inc. (a) | 1,033,700 | 8,786,450 | |
| Facebook, Inc. Class A (a) | 3,565,900 | 483,322,086 | |
| Mix Telematics Ltd. | 29,598,044 | 8,393,728 | |
| New Relic, Inc. (a) | 261,400 | 9,196,052 | |
| Pandora Media, Inc. (a)(b) | 1,303,200 | 16,133,616 | |
| Twilio, Inc. Class A (b) | 287,800 | 9,129,016 | |
| Twitter, Inc. (a)(b) | 951,500 | 15,005,155 | |
| Web.com Group, Inc. (a) | 252,234 | 4,855,505 | |
| Yahoo!, Inc. (a) | 1,822,059 | 83,195,214 | |
| 1,542,988,038 | |||
| IT Services - 22.3% | |||
| Data Processing & Outsourced Services - 19.1% | |||
| Alliance Data Systems Corp. | 283,500 | 68,884,830 | |
| EVERTEC, Inc. | 668,000 | 11,255,800 | |
| Fidelity National Information Services, Inc. | 700,100 | 57,597,227 | |
| FleetCor Technologies, Inc. (a) | 331,200 | 56,304,000 | |
| Global Payments, Inc. | 516,500 | 41,159,885 | |
| MasterCard, Inc. Class A | 1,455,200 | 160,741,392 | |
| PayPal Holdings, Inc. (a) | 2,133,700 | 89,615,400 | |
| Sabre Corp. | 492,700 | 10,795,057 | |
| The Western Union Co. | 830,400 | 16,309,056 | |
| Total System Services, Inc. | 791,500 | 43,120,920 | |
| Visa, Inc. Class A | 2,723,420 | 239,497,555 | |
| 795,281,122 | |||
| IT Consulting & Other Services - 3.2% | |||
| Cognizant Technology Solutions Corp. Class A (a) | 1,732,400 | 102,679,348 | |
| IBM Corp. | 168,200 | 30,245,724 | |
| 132,925,072 | |||
| TOTAL IT SERVICES | 928,206,194 | ||
| Media - 0.2% | |||
| Advertising - 0.2% | |||
| Aimia, Inc. | 1,186,100 | 8,081,769 | |
| Semiconductors & Semiconductor Equipment - 1.2% | |||
| Semiconductors - 1.2% | |||
| Qualcomm, Inc. | 844,700 | 47,708,656 | |
| Software - 31.2% | |||
| Application Software - 13.2% | |||
| Adobe Systems, Inc. (a) | 1,294,100 | 153,143,794 | |
| Autodesk, Inc. (a) | 626,200 | 54,041,060 | |
| Citrix Systems, Inc. (a) | 240,500 | 18,987,475 | |
| Deem, Inc. (c) | 124,895 | 62,448 | |
| Monotype Imaging Holdings, Inc. | 1,546,800 | 31,168,020 | |
| Paylocity Holding Corp. (a) | 616,400 | 21,734,264 | |
| RealPage, Inc. (a) | 18,144 | 612,360 | |
| RingCentral, Inc. (a) | 400,000 | 10,680,000 | |
| Salesforce.com, Inc. (a) | 1,545,526 | 125,728,540 | |
| Ultimate Software Group, Inc. (a) | 193,700 | 37,459,643 | |
| Workday, Inc. Class A (a)(b) | 918,700 | 76,187,791 | |
| Zendesk, Inc. (a) | 680,200 | 18,521,846 | |
| 548,327,241 | |||
| Home Entertainment Software - 2.2% | |||
| Activision Blizzard, Inc. | 705,700 | 31,848,241 | |
| Electronic Arts, Inc. (a) | 671,000 | 58,041,500 | |
| 89,889,741 | |||
| Systems Software - 15.8% | |||
| Microsoft Corp. | 8,244,400 | 527,476,710 | |
| Oracle Corp. | 426,900 | 18,181,671 | |
| Red Hat, Inc. (a) | 674,300 | 55,838,783 | |
| Tableau Software, Inc. (a) | 1,088,100 | 57,386,394 | |
| 658,883,558 | |||
| TOTAL SOFTWARE | 1,297,100,540 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $2,541,546,366) | 3,983,568,295 | ||
| Money Market Funds - 5.0% | |||
| Fidelity Cash Central Fund, 0.60% (d) | 158,740,399 | 158,772,147 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (d)(e) | 48,993,218 | 49,003,017 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $207,753,687) | 207,775,164 | ||
| TOTAL INVESTMENT PORTFOLIO - 100.9% | |||
| (Cost $2,749,300,053) | 4,191,343,459 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.9)% | (35,908,684) | ||
| NET ASSETS - 100% | $4,155,434,775 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $62,448 or 0.0% of net assets.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(e) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| Deem, Inc. | 10/3/16 | $8,064,516 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $594,608 |
| Fidelity Securities Lending Cash Central Fund | 545,112 |
| Total | $1,139,720 |
Other Affiliated Issuers
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:
| Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, end of period |
| ICF International, Inc. | $38,900,339 | $-- | $46,852,163 | $-- | $-- |
| Lionbridge Technologies, Inc. | 22,485,157 | -- | 23,694,894 | -- | -- |
| Mix Telematics Ltd. | 3,457,177 | 1,381,023 | 824,356 | 148,740 | -- |
| Total | $64,842,673 | $1,381,023 | $71,371,413 | $148,740 | $-- |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $3,983,568,295 | $3,983,505,847 | $-- | $62,448 |
| Money Market Funds | 207,775,164 | 207,775,164 | -- | -- |
| Total Investments in Securities: | $4,191,343,459 | $4,191,281,011 | $-- | $62,448 |
See accompanying notes which are an integral part of the financial statements.
Software and IT Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $46,392,207) — See accompanying schedule: Unaffiliated issuers (cost $2,541,546,366) | $3,983,568,295 | |
| Fidelity Central Funds (cost $207,753,687) | 207,775,164 | |
| Total Investments (cost $2,749,300,053) | $4,191,343,459 | |
| Cash | 38,929 | |
| Receivable for investments sold | 20,782,902 | |
| Receivable for fund shares sold | 4,318,293 | |
| Dividends receivable | 4,642,342 | |
| Distributions receivable from Fidelity Central Funds | 87,108 | |
| Prepaid expenses | 12,811 | |
| Other receivables | 276,798 | |
| Total assets | 4,221,502,642 | |
| Liabilities | ||
| Payable for investments purchased | $2,119,004 | |
| Payable for fund shares redeemed | 12,216,009 | |
| Accrued management fee | 1,899,124 | |
| Other affiliated payables | 655,269 | |
| Other payables and accrued expenses | 183,361 | |
| Collateral on securities loaned | 48,995,100 | |
| Total liabilities | 66,067,867 | |
| Net Assets | $4,155,434,775 | |
| Net Assets consist of: | ||
| Paid in capital | $2,612,634,481 | |
| Accumulated net investment loss | (142,311) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 100,977,173 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 1,441,965,432 | |
| Net Assets, for 29,501,251 shares outstanding | $4,155,434,775 | |
| Net Asset Value, offering price and redemption price per share ($4,155,434,775 ÷ 29,501,251 shares) | $140.86 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends (including $148,740 earned from other affiliated issuers) | $22,428,107 | |
| Income from Fidelity Central Funds (including $545,112 from security lending) | 1,139,720 | |
| Total income | 23,567,827 | |
| Expenses | ||
| Management fee | $20,125,227 | |
| Transfer agent fees | 6,252,674 | |
| Accounting and security lending fees | 1,020,251 | |
| Custodian fees and expenses | 55,617 | |
| Independent trustees' fees and expenses | 78,889 | |
| Registration fees | 102,831 | |
| Audit | 50,574 | |
| Legal | 48,807 | |
| Miscellaneous | 42,580 | |
| Total expenses before reductions | 27,777,450 | |
| Expense reductions | (149,240) | 27,628,210 |
| Net investment income (loss) | (4,060,383) | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 232,414,026 | |
| Fidelity Central Funds | 15,498 | |
| Other affiliated issuers | 21,856,092 | |
| Foreign currency transactions | 431 | |
| Total net realized gain (loss) | 254,286,047 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 730,056,024 | |
| Assets and liabilities in foreign currencies | 1,943 | |
| Total change in net unrealized appreciation (depreciation) | 730,057,967 | |
| Net gain (loss) | 984,344,014 | |
| Net increase (decrease) in net assets resulting from operations | $980,283,631 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $(4,060,383) | $3,012,831 |
| Net realized gain (loss) | 254,286,047 | 117,018,295 |
| Change in net unrealized appreciation (depreciation) | 730,057,967 | (197,993,675) |
| Net increase (decrease) in net assets resulting from operations | 980,283,631 | (77,962,549) |
| Distributions to shareholders from net investment income | (1,211,235) | (1,330,049) |
| Distributions to shareholders from net realized gain | (146,887,357) | (160,508,932) |
| Total distributions | (148,098,592) | (161,838,981) |
| Share transactions | ||
| Proceeds from sales of shares | 1,075,769,868 | 680,171,334 |
| Reinvestment of distributions | 141,773,881 | 155,152,051 |
| Cost of shares redeemed | (865,722,579) | (636,997,573) |
| Net increase (decrease) in net assets resulting from share transactions | 351,821,170 | 198,325,812 |
| Redemption fees | 59,005 | 53,547 |
| Total increase (decrease) in net assets | 1,184,065,214 | (41,422,171) |
| Net Assets | ||
| Beginning of period | 2,971,369,561 | 3,012,791,732 |
| End of period | $4,155,434,775 | $2,971,369,561 |
| Other Information | ||
| Undistributed net investment income end of period | $– | $1,093,261 |
| Accumulated net investment loss end of period | $(142,311) | $– |
| Shares | ||
| Sold | 8,292,367 | 5,708,334 |
| Issued in reinvestment of distributions | 1,094,880 | 1,319,769 |
| Redeemed | (6,629,721) | (5,522,076) |
| Net increase (decrease) | 2,757,526 | 1,506,027 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Software and IT Services Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $111.11 | $119.38 | $124.38 | $87.97 | $89.96 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.14) | .12 | (.17) | .06 | .04 |
| Net realized and unrealized gain (loss) | 35.02 | (2.05) | 7.26 | 41.95 | 7.25 |
| Total from investment operations | 34.88 | (1.93) | 7.09 | 42.01 | 7.29 |
| Distributions from net investment income | (.05) | (.05) | – | – | (.78)C |
| Distributions from net realized gain | (5.08) | (6.29) | (12.09) | (5.60) | (8.50)C |
| Total distributions | (5.13) | (6.34) | (12.09) | (5.60) | (9.28) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $140.86 | $111.11 | $119.38 | $124.38 | $87.97 |
| Total ReturnE | 31.83% | (1.84)% | 6.33% | 48.18% | 8.85% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .76% | .77% | .77% | .79% | .82% |
| Expenses net of fee waivers, if any | .76% | .76% | .77% | .79% | .82% |
| Expenses net of all reductions | .75% | .76% | .77% | .78% | .80% |
| Net investment income (loss) | (.11)% | .10% | (.15)% | .06% | .04% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $4,155,435 | $2,971,370 | $3,012,792 | $3,844,505 | $2,027,731 |
| Portfolio turnover rateH | 44% | 36% | 53% | 87% | 96% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Technology Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Technology Portfolio | 38.52% | 14.57% | 11.16% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Technology Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $28,796 | Technology Portfolio | |
| $20,834 | S&P 500® Index | |
Technology Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Charlie Chai: For the year, the fund returned 38.52%, well ahead of the 33.64% gain of the MSCI U.S. IMI Information Technology 25/50 Index and also topping the S&P 500®. Versus the MSCI sector index, stock selection was an important positive for the fund, especially in the semiconductors, systems software and application software groups. The largest relative contributor was out-of-index semiconductor stock GlobalWafers, which I began buying in August. This Taiwan-based firm specializes in silicon-wafer manufacturing, and our position in this stock soared 155%, partly due to an improving supply/demand backdrop. Other relative contributors included out-of-index, Japan-based silicon-wafer manufacturer Sumco, as well as overweightings in digital-memory maker Micron Technology and Autodesk, which supplies design software for engineering and architectural firms. Conversely, underweighting the technology hardware, storage & peripherals group detracted, as did an overweighting in internet software & services and a modest cash position. The fund’s largest individual detractor by far was China-based online advertising provider 58.com. This out-of-index stock was hurt by selling pressure related to the company’s purchase of a privately held rival, among other factors. Underweighting smartphone maker Apple also weighed on our relative result, as did untimely ownership of an out-of-index position in DeNA, a Japan-based provider of online gaming and e-commerce services.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Technology Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Apple, Inc. | 11.1 | 9.7 |
| Alphabet, Inc. Class C | 5.3 | 5.4 |
| Facebook, Inc. Class A | 5.2 | 6.0 |
| Alphabet, Inc. Class A | 5.1 | 5.6 |
| Microsoft Corp. | 4.4 | 4.1 |
| Autodesk, Inc. | 3.4 | 2.1 |
| Tesla, Inc. | 3.4 | 1.4 |
| JD.com, Inc. sponsored ADR | 2.2 | 0.1 |
| Trimble, Inc. | 2.2 | 1.9 |
| Sumco Corp. | 2.0 | 0.4 |
| 44.3 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Internet Software & Services | 21.7% | |
| Semiconductors & Semiconductor Equipment | 18.0% | |
| Software | 15.7% | |
| Technology Hardware, Storage & Peripherals | 11.3% | |
| Electronic Equipment & Components | 10.4% | |
| All Others* | 22.9% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Internet Software & Services | 24.9% | |
| Semiconductors & Semiconductor Equipment | 18.2% | |
| Software | 16.7% | |
| Technology Hardware, Storage & Peripherals | 10.2% | |
| Electronic Equipment & Components | 5.7% | |
| All Others* | 24.3% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Technology Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 96.3% | |||
| Shares | Value | ||
| Auto Components - 0.0% | |||
| Auto Parts & Equipment - 0.0% | |||
| Weifu High-Technology Co. Ltd. (B Shares) | 98,200 | $234,023 | |
| Automobiles - 3.4% | |||
| Automobile Manufacturers - 3.4% | |||
| Tesla, Inc. (a)(b) | 554,166 | 138,535,958 | |
| Biotechnology - 0.1% | |||
| Biotechnology - 0.1% | |||
| BeiGene Ltd. ADR (b) | 107,300 | 4,181,481 | |
| Genscript Biotech Corp. (a) | 2,390,000 | 1,249,971 | |
| 5,431,452 | |||
| Chemicals - 1.4% | |||
| Industrial Gases - 0.5% | |||
| SK Materials Co., Ltd. | 115,148 | 17,296,561 | |
| Wonik Materials Co. Ltd. (a) | 57,366 | 2,988,655 | |
| 20,285,216 | |||
| Specialty Chemicals - 0.9% | |||
| Duk San Neolux Co. Ltd. (a) | 364,204 | 7,897,936 | |
| Hansol Chemical Co. Ltd. | 64,479 | 4,359,608 | |
| Nitto Denko Corp. | 50,000 | 4,210,245 | |
| Shin-Etsu Chemical Co. Ltd. | 121,000 | 10,235,106 | |
| Soulbrain Co. Ltd. | 221,037 | 9,352,764 | |
| 36,055,659 | |||
| TOTAL CHEMICALS | 56,340,875 | ||
| Commercial Services & Supplies - 0.5% | |||
| Commercial Printing - 0.5% | |||
| Nissha Printing Co. Ltd. (b) | 703,800 | 20,015,497 | |
| Communications Equipment - 1.1% | |||
| Communications Equipment - 1.1% | |||
| Arista Networks, Inc. (a) | 205,400 | 24,440,546 | |
| Ciena Corp. (a) | 1,500 | 39,510 | |
| Cisco Systems, Inc. | 299,800 | 10,247,164 | |
| F5 Networks, Inc. (a) | 200 | 28,654 | |
| Palo Alto Networks, Inc. (a) | 300 | 45,570 | |
| Radware Ltd. (a) | 1,163 | 17,968 | |
| Viavi Solutions, Inc. (a) | 1,030,200 | 10,322,604 | |
| Wistron NeWeb Corp. | 605,070 | 1,768,081 | |
| 46,910,097 | |||
| Consumer Finance - 0.0% | |||
| Consumer Finance - 0.0% | |||
| LendingClub Corp. (a) | 1,100 | 5,874 | |
| Diversified Consumer Services - 1.2% | |||
| Education Services - 1.2% | |||
| China Online Education Group sponsored ADR (a) | 18,563 | 247,259 | |
| New Oriental Education & Technology Group, Inc. sponsored ADR (a) | 594,022 | 28,756,605 | |
| TAL Education Group ADR (a) | 235,914 | 20,399,484 | |
| 49,403,348 | |||
| Specialized Consumer Services - 0.0% | |||
| ZTO Express (Cayman), Inc. sponsored ADR (b) | 27,600 | 355,764 | |
| TOTAL DIVERSIFIED CONSUMER SERVICES | 49,759,112 | ||
| Diversified Financial Services - 0.1% | |||
| Other Diversified Financial Services - 0.1% | |||
| GDS Holdings Ltd. ADR | 787,800 | 6,121,206 | |
| Diversified Telecommunication Services - 0.1% | |||
| Integrated Telecommunication Services - 0.1% | |||
| Bharti Infratel Ltd. | 951,441 | 4,053,160 | |
| Electrical Equipment - 0.7% | |||
| Electrical Components & Equipment - 0.7% | |||
| Acuity Brands, Inc. | 88,700 | 18,742,310 | |
| Lumenpulse, Inc. (a) | 40,300 | 533,106 | |
| Nidec Corp. | 400 | 37,349 | |
| Rockwell Automation, Inc. | 65,000 | 9,821,500 | |
| 29,134,265 | |||
| Electronic Equipment & Components - 10.4% | |||
| Electronic Components - 3.8% | |||
| Alps Electric Co. Ltd. | 1,736,200 | 51,694,237 | |
| Chilisin Electronics Corp. | 2,306,000 | 6,092,341 | |
| Chunghwa Precision Test Tech Co. Ltd. | 92,000 | 4,180,865 | |
| Iriso Electronics Co. Ltd. | 88,300 | 5,258,151 | |
| Japan Aviation Electronics Industry Ltd. | 1,000 | 13,806 | |
| Knowles Corp. (a) | 209,084 | 3,957,960 | |
| Largan Precision Co. Ltd. | 239,000 | 35,503,144 | |
| Ledlink Optics, Inc. | 1,646,309 | 2,332,946 | |
| Lens Technology Co. Ltd. Class A | 2,828,300 | 11,522,818 | |
| Murata Manufacturing Co. Ltd. | 300 | 43,126 | |
| Sunny Optical Technology Group Co. Ltd. | 899,000 | 5,784,571 | |
| TDK Corp. | 74,300 | 5,052,757 | |
| Tong Hsing Electronics Industries Ltd. | 902,000 | 4,054,989 | |
| Universal Display Corp. (b) | 144,544 | 12,264,558 | |
| Walsin Technology Corp. | 1,506,825 | 2,115,652 | |
| Yageo Corp. | 3,056,670 | 7,527,910 | |
| Yaskawa Electric Corp. | 1,900 | 35,617 | |
| 157,435,448 | |||
| Electronic Equipment & Instruments - 2.8% | |||
| Anritsu Corp. | 179,400 | 1,381,290 | |
| Chroma ATE, Inc. | 9,837,644 | 30,060,625 | |
| Cognex Corp. | 232,700 | 17,873,687 | |
| Hexagon AB (B Shares) | 596,300 | 24,085,589 | |
| National Instruments Corp. | 294,700 | 9,501,128 | |
| Topcon Corp. | 1,809,200 | 31,692,604 | |
| 114,594,923 | |||
| Electronic Manufacturing Services - 2.9% | |||
| AAC Technology Holdings, Inc. | 1,789,500 | 18,844,971 | |
| Merry Electronics Co. Ltd. | 2,463,000 | 11,553,963 | |
| Trimble, Inc. (a) | 2,915,621 | 90,471,720 | |
| 120,870,654 | |||
| Technology Distributors - 0.9% | |||
| Dell Technologies, Inc. (a) | 592,552 | 37,621,126 | |
| Digital China Holdings Ltd. (H Shares) | 42,000 | 37,494 | |
| 37,658,620 | |||
| TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 430,559,645 | ||
| Health Care Equipment & Supplies - 0.1% | |||
| Health Care Equipment - 0.1% | |||
| Intai Technology Corp. | 426,513 | 2,118,879 | |
| Olympus Corp. | 8,000 | 283,057 | |
| 2,401,936 | |||
| Health Care Providers & Services - 0.0% | |||
| Managed Health Care - 0.0% | |||
| HealthEquity, Inc. (a) | 800 | 34,960 | |
| Health Care Technology - 0.8% | |||
| Health Care Technology - 0.8% | |||
| athenahealth, Inc. (a) | 138,126 | 16,289,199 | |
| Inovalon Holdings, Inc. Class A (a)(b) | 771,200 | 9,254,400 | |
| M3, Inc. | 56,600 | 1,435,845 | |
| Veeva Systems, Inc. Class A (a) | 93,200 | 4,071,908 | |
| 31,051,352 | |||
| Hotels, Restaurants & Leisure - 0.1% | |||
| Casinos & Gaming - 0.1% | |||
| 500.com Ltd. sponsored ADR Class A (a)(b) | 114,461 | 1,477,692 | |
| Hotels, Resorts & Cruise Lines - 0.0% | |||
| Tuniu Corp. Class A sponsored ADR (a)(b) | 132,471 | 1,103,483 | |
| TOTAL HOTELS, RESTAURANTS & LEISURE | 2,581,175 | ||
| Household Durables - 1.1% | |||
| Consumer Electronics - 1.1% | |||
| Sony Corp. | 710,500 | 21,954,242 | |
| Sony Corp. sponsored ADR | 767,300 | 23,755,608 | |
| 45,709,850 | |||
| Industrial Conglomerates - 0.0% | |||
| Industrial Conglomerates - 0.0% | |||
| Toshiba Corp. (a) | 9,000 | 16,679 | |
| Internet & Direct Marketing Retail - 4.1% | |||
| Internet & Direct Marketing Retail - 4.1% | |||
| Amazon.com, Inc. (a) | 68,600 | 57,969,744 | |
| China Internet Plus Holdings Ltd. (c) | 759,582 | 3,344,212 | |
| Ctrip.com International Ltd. ADR (a) | 8,100 | 384,264 | |
| Groupon, Inc. (a) | 308,400 | 1,304,532 | |
| JD.com, Inc. sponsored ADR (a) | 2,998,800 | 91,673,316 | |
| Jumei International Holding Ltd. sponsored ADR (a) | 753,478 | 3,059,121 | |
| Liberty Interactive Corp. QVC Group Series A (a) | 588 | 11,101 | |
| MySale Group PLC (a) | 42,200 | 62,902 | |
| Netflix, Inc. (a) | 300 | 42,639 | |
| Priceline Group, Inc. (a) | 100 | 172,413 | |
| Vipshop Holdings Ltd. ADR (a) | 844,400 | 10,985,644 | |
| 169,009,888 | |||
| Internet Software & Services - 21.1% | |||
| Internet Software & Services - 21.1% | |||
| 58.com, Inc. ADR (a)(b) | 837,936 | 30,668,458 | |
| Akamai Technologies, Inc. (a) | 500 | 31,300 | |
| Alarm.com Holdings, Inc. (a) | 12,000 | 342,480 | |
| Alphabet, Inc.: | |||
| Class A (a) | 246,303 | 208,108,794 | |
| Class C (a) | 263,568 | 216,971,813 | |
| Apptio, Inc. Class A | 5,300 | 68,847 | |
| Benefitfocus, Inc. (a) | 93,600 | 2,485,080 | |
| Bitauto Holdings Ltd. ADR (a) | 2,000 | 38,120 | |
| BlackLine, Inc. | 100 | 2,853 | |
| Box, Inc. Class A (a) | 54,600 | 962,052 | |
| Cornerstone OnDemand, Inc. (a) | 8,286 | 346,106 | |
| CoStar Group, Inc. (a) | 201,100 | 40,859,498 | |
| DeNA Co. Ltd. | 1,040,000 | 23,392,941 | |
| eBay, Inc. (a) | 25,200 | 854,280 | |
| Endurance International Group Holdings, Inc. (a) | 1,193,620 | 10,145,770 | |
| Envestnet, Inc. (a) | 434 | 16,774 | |
| Facebook, Inc. Class A (a) | 1,581,374 | 214,339,432 | |
| Fang Holdings Ltd. ADR (b) | 5,700 | 16,986 | |
| Hortonworks, Inc. (a)(b) | 409,500 | 4,070,430 | |
| LogMeIn, Inc. | 175,969 | 16,145,156 | |
| MINDBODY, Inc. (a) | 136,300 | 3,618,765 | |
| NetEase, Inc. ADR | 141,200 | 43,074,472 | |
| New Relic, Inc. (a) | 251,000 | 8,830,180 | |
| Nutanix, Inc. Class B | 72,872 | 2,076,160 | |
| Pandora Media, Inc. (a) | 312,300 | 3,866,274 | |
| Q2 Holdings, Inc. (a) | 1,425 | 51,229 | |
| Renren, Inc. ADR (a) | 106,460 | 868,714 | |
| Shopify, Inc. (a) | 6,256 | 370,418 | |
| Shopify, Inc. Class A (a) | 64,300 | 3,807,203 | |
| SINA Corp. | 5,200 | 361,556 | |
| SMS Co., Ltd. | 1,011,600 | 22,393,958 | |
| Tencent Holdings Ltd. | 222,100 | 5,893,860 | |
| The Trade Desk, Inc. (b) | 4,200 | 177,282 | |
| Twilio, Inc. Class A | 11,700 | 371,124 | |
| Twitter, Inc. (a) | 51,000 | 804,270 | |
| Weibo Corp. sponsored ADR (a) | 750 | 37,890 | |
| Xunlei Ltd. sponsored ADR (a) | 1,303,205 | 4,730,634 | |
| Zillow Group, Inc.: | |||
| Class A (a)(b) | 1,298 | 43,652 | |
| Class C (a)(b) | 1,496 | 50,774 | |
| 871,295,585 | |||
| IT Services - 2.9% | |||
| Data Processing & Outsourced Services - 1.9% | |||
| Alliance Data Systems Corp. | 200 | 48,596 | |
| Fidelity National Information Services, Inc. | 251,468 | 20,688,272 | |
| Fiserv, Inc. (a) | 153,900 | 17,760,060 | |
| FleetCor Technologies, Inc. (a) | 2,000 | 340,000 | |
| Global Payments, Inc. | 223,300 | 17,794,777 | |
| PayPal Holdings, Inc. (a) | 8,100 | 340,200 | |
| Paysafe Group PLC (a) | 2,576,735 | 13,524,755 | |
| Total System Services, Inc. | 124,799 | 6,799,050 | |
| Vantiv, Inc. (a) | 600 | 39,228 | |
| Visa, Inc. Class A | 4,500 | 395,730 | |
| 77,730,668 | |||
| IT Consulting & Other Services - 1.0% | |||
| Cognizant Technology Solutions Corp. Class A (a) | 342,612 | 20,306,613 | |
| Computer Sciences Corp. | 286,100 | 19,615,016 | |
| CSRA, Inc. | 125,400 | 3,739,428 | |
| Virtusa Corp. (a) | 600 | 18,606 | |
| 43,679,663 | |||
| TOTAL IT SERVICES | 121,410,331 | ||
| Life Sciences Tools & Services - 0.1% | |||
| Life Sciences Tools & Services - 0.1% | |||
| JHL Biotech, Inc. (a) | 1,015,442 | 2,348,646 | |
| Machinery - 1.2% | |||
| Industrial Machinery - 1.2% | |||
| Han's Laser Technology Industry Group Co. Ltd. | 2,744,500 | 9,610,895 | |
| Harmonic Drive Systems, Inc. (b) | 96,700 | 3,008,291 | |
| HIWIN Technologies Corp. | 1,647,000 | 10,516,076 | |
| King Slide Works Co. Ltd. | 57,000 | 787,308 | |
| Minebea Mitsumi, Inc. | 982,919 | 12,108,771 | |
| Nabtesco Corp. | 145,600 | 4,050,024 | |
| SMC Corp. | 36,900 | 10,461,213 | |
| 50,542,578 | |||
| Media - 0.1% | |||
| Advertising - 0.0% | |||
| iCar Asia Ltd. (a) | 3,611,616 | 692,257 | |
| Cable & Satellite - 0.0% | |||
| Naspers Ltd. Class N | 202 | 32,293 | |
| Publishing - 0.1% | |||
| NEXT Co. Ltd. | 39,300 | 257,814 | |
| Schibsted ASA: | |||
| (A Shares) | 20,866 | 550,553 | |
| (B Shares) | 54,082 | 1,312,780 | |
| 2,121,147 | |||
| TOTAL MEDIA | 2,845,697 | ||
| Professional Services - 0.7% | |||
| Human Resource & Employment Services - 0.6% | |||
| 51job, Inc. sponsored ADR (a) | 800 | 28,760 | |
| Recruit Holdings Co. Ltd. | 384,300 | 18,848,129 | |
| WageWorks, Inc. (a) | 87,200 | 6,714,400 | |
| 25,591,289 | |||
| Research & Consulting Services - 0.1% | |||
| ICF International, Inc. (a) | 61,500 | 2,641,425 | |
| Verisk Analytics, Inc. (a) | 400 | 33,168 | |
| 2,674,593 | |||
| TOTAL PROFESSIONAL SERVICES | 28,265,882 | ||
| Semiconductors & Semiconductor Equipment - 18.0% | |||
| Semiconductor Equipment - 4.1% | |||
| Amkor Technology, Inc. (a) | 306,320 | 3,008,062 | |
| Applied Materials, Inc. | 1,700 | 61,574 | |
| ASM Pacific Technology Ltd. | 2,519,900 | 31,340,909 | |
| Experi Corp. | 153,800 | 5,513,730 | |
| Lam Research Corp. | 172,800 | 20,483,712 | |
| Nanometrics, Inc. (a) | 21,591 | 587,491 | |
| Rubicon Technology, Inc. (a)(b) | 1,141,191 | 639,067 | |
| Siltronic AG (a) | 409,100 | 25,215,243 | |
| SolarEdge Technologies, Inc. (a) | 112,700 | 1,651,055 | |
| Sumco Corp. | 5,571,000 | 81,919,907 | |
| SunEdison, Inc. (a) | 1,300 | 108 | |
| 170,420,858 | |||
| Semiconductors - 13.9% | |||
| Advanced Micro Devices, Inc. (a) | 1,065,300 | 15,404,238 | |
| Advanced Semiconductor Engineering, Inc. | 28,121,330 | 35,115,638 | |
| Advanced Semiconductor Engineering, Inc. rights 3/21/17 (a) | 878,323 | 110,159 | |
| Ambarella, Inc. (a)(b) | 134,889 | 7,951,707 | |
| ams AG | 628,239 | 29,024,035 | |
| ASPEED Tech, Inc. | 399,000 | 6,343,030 | |
| Broadcom Ltd. | 236,400 | 49,863,852 | |
| Cavium, Inc. (a) | 129,700 | 8,496,647 | |
| Chipbond Technology Corp. | 500,000 | 774,506 | |
| ChipMOS TECHNOLOGIES, Inc. sponsored ADR | 401,467 | 6,266,900 | |
| Cirrus Logic, Inc. (a) | 41,000 | 2,217,280 | |
| Dialog Semiconductor PLC (a) | 444,000 | 23,398,735 | |
| eMemory Technology, Inc. | 322,000 | 4,615,435 | |
| GlobalWafers Co. Ltd. | 7,623,000 | 47,555,282 | |
| Himax Technologies, Inc. sponsored ADR (b) | 1,874,991 | 12,712,439 | |
| Hua Hong Semiconductor Ltd. | 6,971,000 | 8,333,339 | |
| Infineon Technologies AG | 122,300 | 2,173,978 | |
| Inphi Corp. (a) | 21,600 | 1,013,904 | |
| Integrated Device Technology, Inc. (a) | 416,400 | 9,956,124 | |
| LandMark Optoelectronics Corp. | 680,000 | 7,110,793 | |
| MagnaChip Semiconductor Corp. (a)(b) | 295,035 | 2,168,507 | |
| Marvell Technology Group Ltd. | 2,286,754 | 35,673,362 | |
| Maxim Integrated Products, Inc. | 900 | 39,870 | |
| Melexis NV | 567 | 47,135 | |
| Mellanox Technologies Ltd. (a) | 603,800 | 29,223,920 | |
| Micron Technology, Inc. (a) | 1,845,000 | 43,246,800 | |
| Monolithic Power Systems, Inc. | 167,995 | 14,778,520 | |
| NVIDIA Corp. | 346,850 | 35,198,338 | |
| NXP Semiconductors NV (a) | 429,308 | 44,137,155 | |
| ON Semiconductor Corp. (a) | 489,300 | 7,403,109 | |
| Power Integrations, Inc. | 5,200 | 328,640 | |
| Qualcomm, Inc. | 507,200 | 28,646,656 | |
| Semiconductor Manufacturing International Corp. (a) | 29,700 | 38,621 | |
| Semtech Corp. (a) | 744,776 | 24,912,757 | |
| Silergy Corp. | 230,000 | 3,873,668 | |
| Silicon Laboratories, Inc. (a) | 141,200 | 9,531,000 | |
| Silicon Motion Technology Corp. sponsored ADR | 208,900 | 8,479,251 | |
| Siliconware Precision Industries Co. Ltd. sponsored ADR | 141,857 | 1,112,159 | |
| Sitronix Technology Corp. | 596,000 | 1,927,967 | |
| SK Hynix, Inc. | 881 | 36,268 | |
| Skyworks Solutions, Inc. | 4,600 | 436,126 | |
| STMicroelectronics NV (France) | 2,860 | 43,618 | |
| Vanguard International Semiconductor Corp. | 192,000 | 379,659 | |
| Xilinx, Inc. | 600 | 35,292 | |
| 570,136,419 | |||
| TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 740,557,277 | ||
| Software - 15.7% | |||
| Application Software - 6.3% | |||
| 8x8, Inc. (a) | 2,400 | 36,240 | |
| Adobe Systems, Inc. (a) | 33,539 | 3,969,005 | |
| ANSYS, Inc. (a) | 38,714 | 4,133,107 | |
| Aspen Technology, Inc. (a) | 68,900 | 4,005,846 | |
| Autodesk, Inc. (a) | 1,635,900 | 141,178,170 | |
| Blackbaud, Inc. | 600 | 42,912 | |
| Callidus Software, Inc. (a) | 586,428 | 11,054,168 | |
| Citrix Systems, Inc. (a) | 507 | 40,028 | |
| Ellie Mae, Inc. (a) | 110,600 | 10,568,936 | |
| Guidewire Software, Inc. (a) | 411 | 22,457 | |
| HubSpot, Inc. (a) | 20,100 | 1,195,950 | |
| iFlytek Co. Ltd. | 833,018 | 3,731,009 | |
| Intuit, Inc. | 180,300 | 22,616,832 | |
| Kingdee International Software Group Co. Ltd. (a) | 707,600 | 273,455 | |
| LINE Corp. ADR (b) | 8,442 | 288,716 | |
| Linx SA | 4,200 | 22,102 | |
| Mobileye NV (a) | 106,700 | 4,856,984 | |
| Parametric Technology Corp. (a) | 900 | 48,501 | |
| Paylocity Holding Corp. (a) | 107,528 | 3,791,437 | |
| RealPage, Inc. (a) | 16,400 | 553,500 | |
| Salesforce.com, Inc. (a) | 196,792 | 16,009,029 | |
| Splunk, Inc. (a) | 6,800 | 419,764 | |
| SS&C Technologies Holdings, Inc. | 140,400 | 4,916,808 | |
| Ultimate Software Group, Inc. (a) | 19,217 | 3,716,376 | |
| Workday, Inc. Class A (a) | 111,700 | 9,263,281 | |
| Workiva, Inc. (a) | 1,900 | 28,405 | |
| Zendesk, Inc. (a) | 548,175 | 14,926,805 | |
| 261,709,823 | |||
| Home Entertainment Software - 4.4% | |||
| Activision Blizzard, Inc. | 1,136,400 | 51,285,732 | |
| Electronic Arts, Inc. (a) | 481,300 | 41,632,450 | |
| NCSOFT Corp. | 150 | 36,231 | |
| Nintendo Co. Ltd. | 177,600 | 37,096,333 | |
| Nintendo Co. Ltd. ADR (b) | 412,200 | 10,760,481 | |
| Square Enix Holdings Co. Ltd. | 674,400 | 20,500,031 | |
| Take-Two Interactive Software, Inc. (a) | 319,100 | 18,182,318 | |
| 179,493,576 | |||
| Systems Software - 5.0% | |||
| Allot Communications Ltd. (a) | 528,072 | 2,576,991 | |
| CommVault Systems, Inc. (a) | 600 | 29,430 | |
| Imperva, Inc. (a) | 125,761 | 5,156,201 | |
| Microsoft Corp. | 2,816,040 | 180,170,239 | |
| Oracle Corp. | 7,200 | 306,648 | |
| Progress Software Corp. | 95,300 | 2,733,204 | |
| Proofpoint, Inc. (a) | 85,147 | 6,707,029 | |
| Rapid7, Inc. (a) | 4,600 | 69,690 | |
| ServiceNow, Inc. (a) | 4,650 | 404,178 | |
| Tableau Software, Inc. (a) | 146,300 | 7,715,862 | |
| 205,869,472 | |||
| TOTAL SOFTWARE | 647,072,871 | ||
| Technology Hardware, Storage & Peripherals - 11.3% | |||
| Technology Hardware, Storage & Peripherals - 11.3% | |||
| Apple, Inc. | 3,339,597 | 457,491,395 | |
| BlackBerry Ltd. (a) | 2,700 | 18,763 | |
| Getac Technology Corp. | 2,065,000 | 2,892,628 | |
| HP, Inc. | 12,300 | 213,651 | |
| HTC Corp. (a) | 1,343,000 | 3,451,891 | |
| Nimble Storage, Inc. (a) | 3,700 | 33,559 | |
| Samsung Electronics Co. Ltd. | 24 | 40,663 | |
| Stratasys Ltd. (a) | 300 | 5,931 | |
| 464,148,481 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $2,938,325,280) | 3,966,394,352 | ||
| Convertible Preferred Stocks - 1.3% | |||
| Internet & Direct Marketing Retail - 0.7% | |||
| Internet & Direct Marketing Retail - 0.7% | |||
| China Internet Plus Holdings Ltd.: | |||
| Series A-11 (a)(c) | 2,802,162 | 12,337,079 | |
| Series B (a)(c) | 3,918,573 | 18,153,965 | |
| 30,491,044 | |||
| Internet Software & Services - 0.6% | |||
| Internet Software & Services - 0.6% | |||
| Uber Technologies, Inc. Series D, 8.00% (a)(c) | 515,696 | 25,151,643 | |
| TOTAL CONVERTIBLE PREFERRED STOCKS | |||
| (Cost $31,985,667) | 55,642,687 | ||
| Money Market Funds - 8.0% | |||
| Fidelity Cash Central Fund, 0.60% (d) | 142,528,696 | 142,557,201 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (d)(e) | 187,006,581 | 187,043,982 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $329,577,107) | 329,601,183 | ||
| TOTAL INVESTMENT PORTFOLIO - 105.6% | |||
| (Cost $3,299,888,054) | 4,351,638,222 | ||
| NET OTHER ASSETS (LIABILITIES) - (5.6)% | (232,149,398) | ||
| NET ASSETS - 100% | $4,119,488,824 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $58,986,899 or 1.4% of net assets.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(e) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| China Internet Plus Holdings Ltd. | 11/16/16 | $2,140,730 |
| China Internet Plus Holdings Ltd. Series A-11 | 1/26/15 | $8,857,214 |
| China Internet Plus Holdings Ltd. Series B | 12/11/15 | $15,128,435 |
| Uber Technologies, Inc. Series D, 8.00% | 6/6/14 | $8,000,018 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $294,202 |
| Fidelity Securities Lending Cash Central Fund | 3,000,746 |
| Total | $3,294,948 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $3,966,394,352 | $3,858,493,136 | $104,557,004 | $3,344,212 |
| Convertible Preferred Stocks | 55,642,687 | -- | -- | 55,642,687 |
| Money Market Funds | 329,601,183 | 329,601,183 | -- | -- |
| Total Investments in Securities: | $4,351,638,222 | $4,188,094,319 | $104,557,004 | $58,986,899 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:
| Investments in Securities: | |
| Convertible Preferred Stocks | |
| Beginning Balance | $51,907,993 |
| Total Realized Gain (Loss) | -- |
| Total Unrealized Gain (Loss) | 4,710,924 |
| Cost of Purchases | -- |
| Proceeds of Sales | (976,230) |
| Amortization/Accretion | -- |
| Transfers in to Level 3 | -- |
| Transfers out of Level 3 | -- |
| Ending Balance | $55,642,687 |
| The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2017 | $4,544,302 |
| Other Investments in Securities | |
| Beginning Balance | $-- |
| Total Realized Gain (Loss) | -- |
| Total Unrealized Gain (Loss) | 1,203,482 |
| Cost of Purchases | 2,140,730 |
| Proceeds of Sales | -- |
| Amortization/Accretion | -- |
| Transfers in to Level 3 | -- |
| Transfers out of Level 3 | -- |
| Ending Balance | $3,344,212 |
| The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2017 | $1,203,482 |
The information used in the above reconciliation represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges.
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 66.2% |
| Japan | 10.3% |
| Cayman Islands | 8.9% |
| Taiwan | 5.6% |
| Singapore | 1.2% |
| Netherlands | 1.2% |
| Korea (South) | 1.0% |
| Others (Individually Less Than 1%) | 5.6% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Technology Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $184,912,736) — See accompanying schedule: Unaffiliated issuers (cost $2,970,310,947) | $4,022,037,039 | |
| Fidelity Central Funds (cost $329,577,107) | 329,601,183 | |
| Total Investments (cost $3,299,888,054) | $4,351,638,222 | |
| Foreign currency held at value (cost $2,125,024) | 2,122,074 | |
| Receivable for investments sold | 26,653,521 | |
| Receivable for fund shares sold | 14,514,739 | |
| Dividends receivable | 2,748,342 | |
| Distributions receivable from Fidelity Central Funds | 268,751 | |
| Prepaid expenses | 11,278 | |
| Other receivables | 205,810 | |
| Total assets | 4,398,162,737 | |
| Liabilities | ||
| Payable for investments purchased | $85,089,573 | |
| Payable for fund shares redeemed | 3,885,473 | |
| Accrued management fee | 1,806,860 | |
| Other affiliated payables | 596,299 | |
| Other payables and accrued expenses | 276,226 | |
| Collateral on securities loaned | 187,019,482 | |
| Total liabilities | 278,673,913 | |
| Net Assets | $4,119,488,824 | |
| Net Assets consist of: | ||
| Paid in capital | $2,928,023,118 | |
| Distributions in excess of net investment income | (121,462) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 139,779,648 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 1,051,807,520 | |
| Net Assets, for 28,032,349 shares outstanding | $4,119,488,824 | |
| Net Asset Value, offering price and redemption price per share ($4,119,488,824 ÷ 28,032,349 shares) | $146.95 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $25,480,745 | |
| Income from Fidelity Central Funds (including $3,000,746 from security lending) | 3,294,948 | |
| Total income | 28,775,693 | |
| Expenses | ||
| Management fee | $18,198,444 | |
| Transfer agent fees | 5,639,145 | |
| Accounting and security lending fees | 990,095 | |
| Custodian fees and expenses | 386,189 | |
| Independent trustees' fees and expenses | 71,154 | |
| Registration fees | 68,963 | |
| Audit | 56,439 | |
| Legal | 45,884 | |
| Interest | 1,124 | |
| Miscellaneous | 39,060 | |
| Total expenses before reductions | 25,496,497 | |
| Expense reductions | (371,525) | 25,124,972 |
| Net investment income (loss) | 3,650,721 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 260,908,395 | |
| Fidelity Central Funds | 9,245 | |
| Foreign currency transactions | 149,103 | |
| Total net realized gain (loss) | 261,066,743 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 806,030,429 | |
| Assets and liabilities in foreign currencies | 56,699 | |
| Total change in net unrealized appreciation (depreciation) | 806,087,128 | |
| Net gain (loss) | 1,067,153,871 | |
| Net increase (decrease) in net assets resulting from operations | $1,070,804,592 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $3,650,721 | $3,072,125 |
| Net realized gain (loss) | 261,066,743 | 27,243,106 |
| Change in net unrealized appreciation (depreciation) | 806,087,128 | (259,186,503) |
| Net increase (decrease) in net assets resulting from operations | 1,070,804,592 | (228,871,272) |
| Distributions to shareholders from net investment income | (1,878,708) | (2,586,864) |
| Distributions to shareholders from net realized gain | (51,148,484) | (119,537,749) |
| Total distributions | (53,027,192) | (122,124,613) |
| Share transactions | ||
| Proceeds from sales of shares | 875,621,785 | 678,111,909 |
| Reinvestment of distributions | 50,893,756 | 117,321,605 |
| Cost of shares redeemed | (602,177,811) | (491,970,948) |
| Net increase (decrease) in net assets resulting from share transactions | 324,337,730 | 303,462,566 |
| Redemption fees | 28,097 | 31,329 |
| Total increase (decrease) in net assets | 1,342,143,227 | (47,501,990) |
| Net Assets | ||
| Beginning of period | 2,777,345,597 | 2,824,847,587 |
| End of period | $4,119,488,824 | $2,777,345,597 |
| Other Information | ||
| Distributions in excess of net investment income end of period | $(121,462) | $(2,876,339) |
| Shares | ||
| Sold | 6,614,908 | 5,668,453 |
| Issued in reinvestment of distributions | 402,895 | 965,142 |
| Redeemed | (4,756,350) | (4,237,584) |
| Net increase (decrease) | 2,261,453 | 2,396,011 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Technology Portfolio
| Years ended February 28, | 2017 | 2016A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $107.77 | $120.85 | $130.70 | $104.11 | $101.57 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .14 | .13 | .16 | .06 | .01 |
| Net realized and unrealized gain (loss) | 41.04 | (8.26) | 10.26 | 36.34 | 2.53 |
| Total from investment operations | 41.18 | (8.13) | 10.42 | 36.40 | 2.54 |
| Distributions from net investment income | (.07) | (.10) | (.17) | (.09)C | – |
| Distributions from net realized gain | (1.93) | (4.85) | (20.10) | (9.72)C | – |
| Total distributions | (2.00) | (4.95) | (20.27) | (9.81) | – |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $146.95 | $107.77 | $120.85 | $130.70 | $104.11 |
| Total ReturnE | 38.52% | (7.16)% | 9.97% | 36.20% | 2.50% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .77% | .78% | .78% | .80% | .81% |
| Expenses net of fee waivers, if any | .77% | .77% | .78% | .80% | .81% |
| Expenses net of all reductions | .76% | .76% | .78% | .77% | .79% |
| Net investment income (loss) | .11% | .11% | .13% | .05% | .01% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $4,119,489 | $2,777,346 | $2,824,848 | $2,411,391 | $2,028,324 |
| Portfolio turnover rateH | 82% | 130% | 144% | 181% | 140% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2017
1. Organization.
Communications Equipment Portfolio, Computers Portfolio, IT Services Portfolio, Semiconductors Portfolio (formerly Electronics Portfolio), Software and IT Services Portfolio, and Technology Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the Trust). The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Share transactions on the Statement of Changes in Net Assets may contain exchanges between affiliated funds. Certain Funds investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but do not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of each Fund's investments to the Fair Value Committee (the Committee) established by the Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, each Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees each Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing each Fund's investments and ratifies the fair value determinations of the Committee.
Each Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy. Equity securities, including restricted securities, for which observable inputs are not available are valued using alternate valuation approaches, including the market approach and the income approach and are categorized as Level 3 in the hierarchy. The market approach generally consists of using comparable market transactions while the income approach generally consists of using the net present value of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
The following provides information on Level 3 securities held by Technology Fund that were valued at period end based on unobservable inputs. These amounts exclude valuations provided by a broker.
| Asset Type | Fair Value | Valuation Technique(s) | Unobservable Input | Amount or Range/Weighted Average | Impact to Valuation from an Increase in Input(a) |
| Equities | $58,986,899 | Market approach | Discount rate | 2.3% | Decrease |
| Transaction price | $3.86 - $48.77 / $29.95 | Increase | |||
| Enterprise value/Gross profit multiple (EV/GP) | 11.4 | Increase | |||
| Discount for lack of marketability | 15.0% | Decrease | |||
| Recovery value | Liquidity preference | $120.00 | Increase |
(a) Represents the expected directional change in the fair value of the Level 3 investments that would result from an increase in the corresponding input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs could result in significantly higher or lower fair value measurements.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 28, 2017, including information on transfers between Levels 1 and 2, as well as a roll forward of Level 3 investments, is included at the end of each applicable Fund's Schedule of Investments.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Funds represent a return of capital or capital gain. The Funds determine the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Large, non-recurring dividends recognized by the Funds are presented separately on the Statement of Operations as "Special Dividends" and the impact of these dividends is presented in the Financial Highlights. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for Computers Portfolio, Semiconductors Portfolio, Software and IT Services Portfolio and Technology Portfolio, independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2017, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. Each Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, certain Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, certain foreign taxes, passive foreign investment companies (PFIC), market discount, deferred trustees compensation, net operating losses, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) on securities | |
| Communications Equipment Portfolio | $181,824,605 | $42,591,233 | $(10,884,565) | $31,706,668 |
| Computers Portfolio | 324,176,862 | 172,006,898 | (6,576,564) | 165,430,334 |
| IT Services Portfolio | 1,169,906,444 | 533,500,106 | (20,897,088) | 512,603,018 |
| Semiconductors Portfolio | 2,550,274,366 | 534,889,175 | (50,849,709) | 484,039,466 |
| Software and IT Services Portfolio | 2,751,988,874 | 1,494,178,343 | (54,823,758) | 1,439,354,585 |
| Technology Portfolio | 3,304,917,893 | 1,134,931,717 | (88,211,388) | 1,046,720,329 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed ordinary income | Undistributed long-term capital gain | Net unrealized appreciation (depreciation) on securities and other investments | |
| Communications Equipment Portfolio | $456,131 | $798,748 | $31,707,113 |
| Computers Portfolio | 121,093 | 10,553,529 | 165,337,093 |
| IT Services Portfolio | – | 13,026,150 | 512,595,235 |
| Semiconductors Portfolio | 104,231,069 | 238,750 | 484,035,072 |
| Software and IT Services Portfolio | 56,738,792 | 46,927,203 | 1,439,276,611 |
| Technology Portfolio | 60,205,148 | 84,604,339 | 1,046,778,111 |
In addition, certain of the Funds intend to elect to defer to the next fiscal year ordinary losses recognized during the period of January 1, 2017 to February 28, 2017 Loss deferrals were as follows:
| Ordinary losses | |
| IT Services Portfolio | $(93,249) |
The tax character of distributions paid was as follows:
| February 28, 2017 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Communications Equipment Portfolio | $2,293,875 | $– | $2,293,875 |
| Computers Portfolio | 4,778,571 | 21,223,303 | 26,001,874 |
| IT Services Portfolio | 5,197,978 | – | 5,197,978 |
| Semiconductors Portfolio | 20,336,461 | 57,300,495 | 77,636,956 |
| Software and IT Services Portfolio | 50,482,973 | 97,615,618 | 148,098,591 |
| Technology Portfolio | 11,616,237 | 41,410,956 | 53,027,193 |
| February 29, 2016 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Communications Equipment Portfolio | $4,760,923 | $1,387,952 | $6,148,875 |
| Computers Portfolio | 5,463,090 | 14,901,951 | 20,365,041 |
| IT Services Portfolio | 16,214,259 | 32,829,916 | 49,044,175 |
| Semiconductors Portfolio | 177,902,476 | 73,755,702 | 251,658,178 |
| Software and IT Services Portfolio | 19,876,770 | 141,962,211 | 161,838,981 |
| Technology Portfolio | 47,875,554 | 74,249,059 | 122,124,613 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital. In November 2016, the Board of Trustees approved the elimination of these redemption fees for IT Services Portfolio, Software and IT Services Portfolio and Technology Portfolio effective December 12, 2016.
Restricted Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, are noted in the table below.
| Purchases ($) | Sales ($) | |
| Communications Equipment Portfolio | 71,636,232 | 78,669,178 |
| Computers Portfolio | 196,335,114 | 253,636,310 |
| IT Services Portfolio | 484,385,033 | 1,038,662,924 |
| Semiconductors Portfolio | 2,956,191,049 | 2,115,402,610 |
| Software and IT Services Portfolio | 1,715,824,173 | 1,543,348,618 |
| Technology Portfolio | 2,855,217,369 | 2,675,120,768 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total | |
| Communications Equipment Portfolio | .30% | .25% | .55% |
| Computers Portfolio | .30% | .25% | .55% |
| IT Services Portfolio | .30% | .25% | .55% |
| Semiconductors Portfolio | .30% | .25% | .55% |
| Software and IT Services Portfolio | .30% | .25% | .55% |
| Technology Portfolio | .30% | .25% | .55% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
| Communications Equipment Portfolio | .25% |
| Computers Portfolio | .20% |
| IT Services Portfolio | .20% |
| Semiconductors Portfolio | .17% |
| Software and IT Services Portfolio | .17% |
| Technology Portfolio | .17% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Communications Equipment Portfolio | $4,439 |
| Computers Portfolio | 7,305 |
| IT Services Portfolio | 24,404 |
| Semiconductors Portfolio | 119,331 |
| Software and IT Services Portfolio | 41,375 |
| Technology Portfolio | 64,935 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| IT Services Portfolio | Borrower | $8,532,385 | .60% | $7,402 |
| Technology Portfolio | Borrower | 9,718,500 | .69% | 1,124 |
Interfund Trades. The Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Other. During the period, the investment adviser reimbursed Software and IT Services for certain losses in the amount of $12,406.
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
| Communications Equipment Portfolio | $554 |
| Computers Portfolio | 1,227 |
| IT Services Portfolio | 5,691 |
| Semiconductors Portfolio | 5,340 |
| Software and IT Services Portfolio | 10,702 |
| Technology Portfolio | 9,638 |
During the period, the Funds did not borrow on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. The Funds or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Funds may apply collateral received from the borrower against the obligation. The Funds may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
8. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| IT Services Portfolio | $11,353,000 | .90% | $2,838 |
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of Certain Funds include an amount in addition to trade execution, which may be rebated back to the Funds to offset certain expenses. In addition, through arrangements with each applicable Fund's custodian, credits realized as a result of certain uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage Service reduction | Custody expense reduction | |
| Communications Equipment Portfolio | $5,951 | $60 |
| Computers Portfolio | 21,475 | – |
| IT Services Portfolio | 34,039 | – |
| Semiconductors Portfolio | 282,207 | 239 |
| Software and IT Services Portfolio | 116,760 | 1,157 |
| Technology Portfolio | 342,571 | 369 |
In addition, during the period the investment adviser reimbursed and/or waived a portion of operating expenses as follows:
| Amount | |
| Communications Equipment Portfolio | $1,678 |
| Computers Portfolio | 3,781 |
| IT Services Portfolio | 15,704 |
| Semiconductors Portfolio | 18,101 |
| Software and IT Services Portfolio | 31,323 |
| Technology Portfolio | 28,585 |
10. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, the following mutual funds managed by the investment adviser or its affiliates were the owners of record of 10% or more of the total outstanding shares of the following Funds.
| VIP FundsManager 60% Portfolio | |
| Technology Portfolio | 12% |
Mutual funds managed by the investment adviser or its affiliates, in aggregate, were the owners of record of more than 20% of the total outstanding shares of the following Funds.
| % of shares held | |
| Technology Portfolio | 26% |
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Communications Equipment Portfolio, Computers Portfolio, IT Services Portfolio, Semiconductors Portfolio (formerly Electronics Portfolio), Software and IT Services Portfolio and Technology Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Communications Equipment Portfolio, Computers Portfolio, IT Services Portfolio, Semiconductors Portfolio, Software and IT Services Portfolio and Technology Portfolio (each a fund of Fidelity Select Portfolios) (the "Funds") as of February 28, 2017, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of February 28, 2017 by correspondence with the custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 18, 2017
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 90 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the funds is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Each fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
* Determined to be an "Interested Trustee" by virtue of, among other things, his or her affiliation with the trust or various entities under common control with SelectCo.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed the oil refining, drilling and marketing of petroleum products (including specialty petroleum products), recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present) and serves as its President and CEO. Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006. Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Trustee or Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006), and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue serves as a Member (2012-present) and Co-Chairman (2016-present) of the Board of Directors of United Way of New York, Member of the Board of Directors of NYC Leadership Academy (2012-present) and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services), Treasurer of United Way of New York (2012-2016), and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Carol B. Tomé (1957)
Year of Election or Appointment: 2017
Member of the Advisory Board
Ms. Tomé also serves as Trustee or Member of the Advisory Board of other Fidelity® funds. Ms. Tomé is Chief Financial Officer (2001-present) and Executive Vice President of Corporate Services (2007-present) of The Home Depot, Inc. (home improvement retailer) and a Director (2003-present) and Chair of the Audit Committee (2004-present) of United Parcel Service, Inc. (package delivery and supply chain management). Previously, Ms. Tomé served as Senior Vice President of Finance and Accounting/Treasurer (2000-2007) and Vice President and Treasurer (1995-2000) of The Home Depot, Inc. and Chair of the Board (2010-2012), Vice Chair of the Board (2009 and 2013), and a Director (2008-2013) of the Federal Reserve Bank of Atlanta. Ms. Tomé is also a director or trustee of many community and professional organizations.
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Interim Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (UK) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
Jeffrey S. Christian (1961)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Christian also serves as Assistant Treasurer of other funds. Mr. Christian is an employee of Fidelity Investments (2003-present).
William C. Coffey (1969)
Year of Election or Appointment: 2009
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Senior Vice President of Fidelity Management & Research Company (FMR) (investment adviser firm, 2016), Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of FMR (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
Colm A. Hogan (1973)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan is an employee of Fidelity Investments (2005-present). Mr. Colm A. Hogan is not related to Mr. Brian B. Hogan.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche (accounting firm, 2005-2013).
Renee Stagnone (1975)
Year of Election or Appointment: 2016
Assistant Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2016 to February 28, 2017).
Actual Expenses
The first line of the accompanying table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio-A | Beginning Account Value September 1, 2016 | Ending Account Value February 28, 2017 | Expenses Paid During Period-B September 1, 2016 to February 28, 2017 | |
| Communications Equipment Portfolio | .87% | |||
| Actual | $1,000.00 | $1,108.30 | $4.55 | |
| Hypothetical-C | $1,000.00 | $1,020.48 | $4.36 | |
| Computers Portfolio | .80% | |||
| Actual | $1,000.00 | $1,189.90 | $4.34 | |
| Hypothetical-C | $1,000.00 | $1,020.83 | $4.01 | |
| IT Services Portfolio | .79% | |||
| Actual | $1,000.00 | $1,093.10 | $4.10 | |
| Hypothetical-C | $1,000.00 | $1,020.88 | $3.96 | |
| Semiconductors Portfolio | .77% | |||
| Actual | $1,000.00 | $1,163.70 | $4.13 | |
| Hypothetical-C | $1,000.00 | $1,020.98 | $3.86 | |
| Software and IT Services Portfolio | .75% | |||
| Actual | $1,000.00 | $1,092.60 | $3.89 | |
| Hypothetical-C | $1,000.00 | $1,021.08 | $3.76 | |
| Technology Portfolio | .76% | |||
| Actual | $1,000.00 | $1,140.60 | $4.03 | |
| Hypothetical-C | $1,000.00 | $1,021.03 | $3.81 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains | |
| Communications Equipment Portfolio | 04/13/17 | 04/12/17 | $0.078 | $0.136 |
| Computers Portfolio | 04/13/17 | 04/12/17 | $0.020 | $1.688 |
| Semiconductors Portfolio | 04/13/17 | 04/12/17 | $0.240 | $3.216 |
| IT Services Portfolio | 04/13/17 | 04/12/17 | $0.000 | $0.358 |
| Software and IT Services Portfolio | 04/13/17 | 04/12/17 | $0.000 | $3.666 |
| Technology Portfolio | 04/13/17 | 04/12/17 | $0.000 | $4.883 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2017, or, if subsequently determined to be different, the net capital gain of such year.
| Communications Equipment Portfolio | $798,748 |
| Computers Portfolio | $31,776,833 |
| Semiconductors Portfolio | $244,717 |
| IT Services Portfolio | $13,847,183 |
| Software and IT Services Portfolio | $125,543,524 |
| Technology Portfolio | $126,015,294 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 2016 | December 2016 | |
| Communications Equipment Portfolio | 100% | 100% |
| Computers Portfolio | 100% | 100% |
| Semiconductors Portfolio | 100% | 100% |
| IT Services Portfolio | – | 100% |
| Software and IT Services Portfolio | 98% | 34% |
| Technology Portfolio | – | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| April 2016 | December 2016 | |
| Communications Equipment Portfolio | 100% | 100% |
| Computers Portfolio | 100% | 100% |
| Semiconductors Portfolio | 100% | 100% |
| IT Services Portfolio | – | 100% |
| Software and IT Services Portfolio | 98% | 36% |
| Technology Portfolio | – | 100% |
The funds will notify shareholders in January 2018 of amounts for use in preparing 2017 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Communications Equipment Portfolio
Computers Portfolio
IT Services Portfolio
Semiconductors Portfolio (formerly known as Electronics Portfolio)
Software and IT Services Portfolio
Technology Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. SelectCo and the sub-advisers are collectively referred to herein as the Investment Advisers. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2017 meeting, the Board unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of the Investment Advisers as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the investment personnel compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the Investment Advisers' investment staffs, including their size, education, experience, and resources, as well as Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board considered that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, compliance, and technology and operations capabilities and resources, which are integral parts of the investment management process.Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians, subcustodians, and pricing vendors; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs; (iv) broadening eligibility requirements for certain lower-priced share classes of, and streamlining the fee structure for, certain existing equity index funds; (v) lowering expense caps for certain existing funds and classes to reduce expenses paid by shareholders; (vi) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vii) rationalizing product lines and gaining increased efficiencies through fund mergers and share class consolidations; (viii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (ix) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; and (x) accelerating the conversion of all remaining Class B shares to Class A shares, which have a lower expense structure.Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.The Board took into account discussions with representatives of SelectCo about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Technology Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2016, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address the fund's performance.In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing fund share classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors, including the following: general market conditions; issuer-specific information; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2016.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should continue to benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Communications Equipment Portfolio
Computers Portfolio
IT Services Portfolio
Semiconductors Portfolio
Software and IT Services Portfolio
Technology Portfolio
SELTEC-ANN-0417
1.813669.112
Fidelity® Select Portfolios® Biotechnology Portfolio Health Care Portfolio Health Care Services Portfolio Medical Equipment and Systems Portfolio Pharmaceuticals Portfolio Annual Report February 28, 2017 |
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Contents
Biotechnology Portfolio | |
Health Care Portfolio | |
Health Care Services Portfolio | |
Medical Equipment and Systems Portfolio | |
Pharmaceuticals Portfolio | |
Board Approval of Investment Advisory Contracts and Management Fees |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2017 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Funds. This report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Funds nor Fidelity Distributors Corporation is a bank.
Biotechnology Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Biotechnology Portfolio | 29.67% | 22.19% | 15.36% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Biotechnology Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $41,751 | Biotechnology Portfolio | |
| $20,834 | S&P 500® Index | |
Biotechnology Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Rajiv Kaul: For the year, the fund gained 29.67%, considerably ahead of the 22.55% return of the MSCI U.S. IMI Biotechnology 25/50 Index. The fund also topped the S&P 500®. Versus the MSCI industry index, stock selection in the fund’s core biotechnology group drove its solid performance. By far, the fund’s largest relative contributor was Gilead Sciences, a major index component I significantly underweighted. The stock declined amid continued erosion in the sales of Harvoni®, one of Gilead’s drugs to treat hepatitis C. Other contributors included overweighted positions in Ariad Pharmaceuticals, Seattle Genetics and Tesaro, all of which posted triple-digit gains this period. Conversely, a small cash position modestly detracted. At the stock level, the most significant relative detractor was pharmaceuticals holding Cempra. The share price of this drug maker tumbled early in November after the U.S. Food & Drug Administration expressed concern about potential liver toxicity from its antibiotic solithromycin. Also weighing on the fund was the December collapse of Ophthotech. The stock lost the vast majority of its value in a single day following negative results from two late-stage clinical trials of the firm’s eye drug for macular degeneration, Fovista®, and I sold it from the fund.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Biotechnology Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Amgen, Inc. | 9.9 | 1.1 |
| Alexion Pharmaceuticals, Inc. | 5.9 | 5.7 |
| Celgene Corp. | 5.5 | 4.5 |
| Regeneron Pharmaceuticals, Inc. | 4.7 | 7.2 |
| Biogen, Inc. | 4.1 | 4.4 |
| Vertex Pharmaceuticals, Inc. | 2.7 | 4.9 |
| Incyte Corp. | 2.5 | 2.4 |
| TESARO, Inc. | 2.3 | 1.2 |
| Seattle Genetics, Inc. | 2.1 | 2.3 |
| BioMarin Pharmaceutical, Inc. | 1.9 | 2.6 |
| 41.6 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Biotechnology | 89.1% | |
| Pharmaceuticals | 9.4% | |
| Health Care Equipment & Supplies | 0.3% | |
| Health Care Technology | 0.1% | |
| Health Care Providers & Services | 0.1% | |
| All Others* | 1.0% | |
| As of August 31, 2016 | ||
| Biotechnology | 86.8% | |
| Pharmaceuticals | 11.0% | |
| Health Care Equipment & Supplies | 0.2% | |
| Health Care Technology | 0.2% | |
| Health Care Providers & Services | 0.1% | |
| All Others* | 1.7% | |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
* Includes short-term investments and net other assets (liabilities).
Biotechnology Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 97.2% | |||
| Shares | Value | ||
| Biotechnology - 87.4% | |||
| Biotechnology - 87.4% | |||
| AbbVie, Inc. (a) | 272,340 | $16,841,506 | |
| AC Immune SA | 539,464 | 6,710,932 | |
| AC Immune SA | 409,751 | 4,842,437 | |
| ACADIA Pharmaceuticals, Inc. (b)(c) | 4,780,980 | 182,203,148 | |
| Acceleron Pharma, Inc. (b)(d) | 3,669,602 | 98,051,765 | |
| Achillion Pharmaceuticals, Inc. (b) | 933,020 | 3,741,410 | |
| Acorda Therapeutics, Inc. (b)(d) | 2,364,111 | 62,530,736 | |
| Adamas Pharmaceuticals, Inc. (b)(c)(d) | 1,782,612 | 32,978,322 | |
| Adaptimmune Therapeutics PLC sponsored ADR (b)(c) | 3,318,171 | 13,372,229 | |
| ADMA Biologics, Inc. (b) | 351,700 | 1,642,439 | |
| Aduro Biotech, Inc. (b)(c) | 2,276,165 | 25,606,856 | |
| Advanced Accelerator Applications SA sponsored ADR (b) | 301,947 | 11,455,869 | |
| Advaxis, Inc. (b) | 602,152 | 5,292,916 | |
| Adverum Biotechnologies, Inc. (b) | 657,857 | 1,743,321 | |
| Agenus, Inc. (b)(c) | 1,241,618 | 5,264,460 | |
| Agenus, Inc. warrants 1/9/18 (b) | 1,548,000 | 279 | |
| Agios Pharmaceuticals, Inc. (b) | 308,390 | 14,938,412 | |
| Aimmune Therapeutics, Inc. (b)(c) | 2,032,185 | 41,192,390 | |
| Akebia Therapeutics, Inc. (b) | 779,378 | 7,809,368 | |
| Alder Biopharmaceuticals, Inc. (b)(c)(d) | 2,945,843 | 67,312,513 | |
| Aldeyra Therapeutics, Inc. (b)(d) | 1,144,052 | 5,663,057 | |
| Alexion Pharmaceuticals, Inc. (b) | 4,321,255 | 567,164,719 | |
| Alkermes PLC (b) | 2,521,111 | 142,442,772 | |
| Alnylam Pharmaceuticals, Inc. (b)(c) | 1,811,378 | 93,539,560 | |
| AMAG Pharmaceuticals, Inc. (b)(c) | 1,161,777 | 26,081,894 | |
| Amarin Corp. PLC ADR (b)(c) | 1,661,031 | 5,647,505 | |
| Amgen, Inc. | 5,350,127 | 944,457,909 | |
| Amicus Therapeutics, Inc. (b)(c) | 3,953,862 | 25,660,564 | |
| Applied Genetic Technologies Corp. (b) | 722,894 | 5,602,429 | |
| Aptevo Therapeutics, Inc. (b) | 101,833 | 203,666 | |
| AquaBounty Technologies, Inc. (b)(c) | 7,555 | 107,432 | |
| Ardelyx, Inc. (b) | 2,028,569 | 27,588,538 | |
| Array BioPharma, Inc. (b)(c) | 7,018,403 | 80,711,635 | |
| Ascendis Pharma A/S sponsored ADR (b) | 142,632 | 4,217,628 | |
| Asterias Biotherapeutics, Inc. (c) | 596,713 | 2,267,509 | |
| Asterias Biotherapeutics, Inc. warrants 9/29/17 (b)(c) | 119,342 | 44,157 | |
| Atara Biotherapeutics, Inc. (b)(c)(d) | 1,849,183 | 28,569,877 | |
| aTyr Pharma, Inc. (b)(c) | 201,820 | 807,280 | |
| aTyr Pharma, Inc. (a)(b) | 675,659 | 2,702,636 | |
| Audentes Therapeutics, Inc. | 261,700 | 4,058,967 | |
| Axovant Sciences Ltd. (b) | 548,009 | 6,965,194 | |
| Bellicum Pharmaceuticals, Inc. (b)(c) | 991,273 | 12,222,396 | |
| BioCryst Pharmaceuticals, Inc. (b)(c) | 1,126,133 | 7,027,070 | |
| Biogen, Inc. (b) | 1,362,604 | 393,247,514 | |
| BioMarin Pharmaceutical, Inc. (b) | 1,963,034 | 184,387,784 | |
| BioTime, Inc. warrants 10/1/18 (b) | 30,113 | 17,767 | |
| bluebird bio, Inc. (b) | 300,319 | 26,322,960 | |
| Blueprint Medicines Corp. (b) | 1,581,444 | 55,635,200 | |
| Calithera Biosciences, Inc. (b)(c) | 307,440 | 2,766,960 | |
| Cara Therapeutics, Inc. (b)(c) | 357,403 | 5,729,170 | |
| Catalyst Pharmaceutical Partners, Inc.: | |||
| warrants 5/2/17 (b) | 141,443 | 5,184 | |
| warrants 5/30/17 (b) | 282,100 | 45,201 | |
| Celgene Corp. (b) | 4,248,968 | 524,790,038 | |
| Celldex Therapeutics, Inc. (b)(c) | 4,534,966 | 16,053,780 | |
| Chiasma, Inc. (b)(c)(d) | 1,650,799 | 2,641,278 | |
| Chiasma, Inc. warrants (b)(d) | 382,683 | 105,173 | |
| Chimerix, Inc. (b) | 1,843,567 | 10,471,461 | |
| Cidara Therapeutics, Inc. (b)(d) | 146,000 | 1,051,200 | |
| Cidara Therapeutics, Inc. (a)(b)(d) | 1,066,786 | 7,680,859 | |
| Clovis Oncology, Inc. (b)(c) | 814,473 | 47,084,684 | |
| Corbus Pharmaceuticals Holdings, Inc. (b)(c) | 746,000 | 6,378,300 | |
| Corvus Pharmaceuticals, Inc. | 845,248 | 12,154,666 | |
| Cytokinetics, Inc. (b)(d) | 2,246,578 | 23,813,727 | |
| Cytokinetics, Inc. warrants 6/25/17 (b)(d) | 3,828,480 | 3,409,874 | |
| CytomX Therapeutics, Inc. (a) | 287,485 | 3,593,563 | |
| DBV Technologies SA sponsored ADR (b)(c) | 773,521 | 28,179,370 | |
| Dicerna Pharmaceuticals, Inc. (b)(c) | 683,098 | 1,967,322 | |
| Dynavax Technologies Corp. (b)(c) | 961,216 | 4,325,472 | |
| Eagle Pharmaceuticals, Inc. (b)(c) | 253,208 | 19,418,522 | |
| Edge Therapeutics, Inc. (b) | 158,943 | 1,552,873 | |
| Editas Medicine, Inc. (c) | 851,718 | 21,233,330 | |
| Emergent BioSolutions, Inc. (b) | 123,967 | 3,890,084 | |
| Enanta Pharmaceuticals, Inc. (b) | 233,028 | 6,715,867 | |
| Epizyme, Inc. (b)(d) | 5,722,274 | 81,256,291 | |
| Esperion Therapeutics, Inc. (b)(c) | 614,906 | 16,092,090 | |
| Exact Sciences Corp. (b)(c) | 1,389,046 | 29,892,270 | |
| Exelixis, Inc. (b) | 5,750,140 | 123,800,514 | |
| Fate Therapeutics, Inc. (b) | 1,760,366 | 7,551,970 | |
| Fibrocell Science, Inc. (b)(d) | 2,432,240 | 1,702,568 | |
| FibroGen, Inc. (b) | 855,311 | 21,382,775 | |
| Five Prime Therapeutics, Inc. (b) | 451,379 | 20,704,755 | |
| Foundation Medicine, Inc. (b)(c) | 75,200 | 1,864,960 | |
| Galapagos Genomics NV sponsored ADR (b) | 1,138,988 | 80,355,603 | |
| Genmab A/S (b) | 375,893 | 74,462,368 | |
| Genocea Biosciences, Inc. (b) | 9,063 | 42,324 | |
| Genomic Health, Inc. (b) | 220,428 | 6,654,721 | |
| GenSight Biologics SA | 446,321 | 3,494,232 | |
| Geron Corp. (b)(c)(d) | 15,808,751 | 33,988,815 | |
| Gilead Sciences, Inc. | 1,094,564 | 77,144,871 | |
| Global Blood Therapeutics, Inc. (b)(c)(d) | 2,465,355 | 68,660,137 | |
| Halozyme Therapeutics, Inc. (b)(c) | 5,208,950 | 66,778,739 | |
| Heron Therapeutics, Inc. (b) | 929,179 | 13,287,260 | |
| Histogenics Corp. (b)(d) | 1,132,386 | 1,891,085 | |
| Idera Pharmaceuticals, Inc. (b)(c) | 1,986,900 | 3,715,503 | |
| Ignyta, Inc. (b) | 334,559 | 2,944,119 | |
| Immune Design Corp. (b) | 343,041 | 1,749,509 | |
| ImmunoGen, Inc. (b)(c) | 640,678 | 2,178,305 | |
| Immunomedics, Inc. (b)(c) | 908,464 | 4,542,320 | |
| Incyte Corp. (b) | 1,767,759 | 235,288,723 | |
| Insys Therapeutics, Inc. (b)(c) | 183,890 | 2,346,436 | |
| Intellia Therapeutics, Inc. (b)(c) | 874,903 | 12,493,615 | |
| Intercept Pharmaceuticals, Inc. (b)(c) | 1,112,768 | 141,978,069 | |
| Intrexon Corp. (b)(c) | 484,353 | 10,781,698 | |
| Ionis Pharmaceuticals, Inc. (b)(c) | 2,570,377 | 127,927,663 | |
| Ironwood Pharmaceuticals, Inc. Class A (b)(c) | 4,112,010 | 69,451,849 | |
| Juno Therapeutics, Inc. (b)(c) | 1,454,327 | 34,962,021 | |
| Karyopharm Therapeutics, Inc. (b)(d) | 3,165,815 | 32,829,502 | |
| Keryx Biopharmaceuticals, Inc. (b)(c) | 1,918,225 | 9,648,672 | |
| Kite Pharma, Inc. (b)(c) | 651,121 | 46,079,833 | |
| Kura Oncology, Inc. (b)(c)(d) | 1,894,217 | 15,816,712 | |
| La Jolla Pharmaceutical Co. (b)(c)(d) | 1,143,904 | 38,332,223 | |
| Lexicon Pharmaceuticals, Inc. (b)(c) | 3,510,504 | 60,311,512 | |
| Ligand Pharmaceuticals, Inc. Class B (b)(c) | 369,101 | 38,619,038 | |
| Lion Biotechnologies, Inc. (b) | 1,204,382 | 9,213,522 | |
| Loxo Oncology, Inc. (b)(d) | 1,951,145 | 86,708,884 | |
| Macrogenics, Inc. (b)(d) | 2,940,497 | 62,162,107 | |
| MediciNova, Inc. (b)(c) | 950,520 | 6,121,349 | |
| Merrimack Pharmaceuticals, Inc. (b)(c) | 2,833,462 | 8,698,728 | |
| MiMedx Group, Inc. (b)(c) | 45,164 | 387,055 | |
| Minerva Neurosciences, Inc. (b)(d) | 3,320,214 | 29,051,873 | |
| Miragen Therapeutics, Inc. (b)(c)(d) | 2,466,347 | 32,333,809 | |
| Mirna Therapeutics, Inc. (b)(c) | 105,000 | 243,600 | |
| Momenta Pharmaceuticals, Inc. (b) | 1,135,145 | 17,537,990 | |
| NantKwest, Inc. (b)(c) | 286,943 | 1,357,240 | |
| Neurocrine Biosciences, Inc. (b) | 3,281,456 | 144,909,097 | |
| NewLink Genetics Corp. (b) | 747,664 | 11,745,801 | |
| Novavax, Inc. (b)(c) | 9,661,621 | 14,589,048 | |
| Novelion Therapeutics, Inc. (b) | 386,407 | 4,010,905 | |
| OncoMed Pharmaceuticals, Inc. (b)(c) | 800,468 | 8,132,755 | |
| Opko Health, Inc. (b)(c) | 1,066,667 | 8,949,336 | |
| Oragenics, Inc. (b) | 1,558,058 | 965,996 | |
| Osiris Therapeutics, Inc. (b)(c) | 66,095 | 380,046 | |
| OvaScience, Inc. (b) | 677,491 | 1,002,687 | |
| Portola Pharmaceuticals, Inc. (b) | 2,704,725 | 93,799,863 | |
| Progenics Pharmaceuticals, Inc. (b)(c) | 2,751,348 | 30,925,152 | |
| Protagonist Therapeutics, Inc. | 572,163 | 7,930,179 | |
| Proteostasis Therapeutics, Inc. | 393,440 | 5,724,552 | |
| Prothena Corp. PLC (b) | 726,935 | 42,634,738 | |
| PTC Therapeutics, Inc. (b) | 936,928 | 12,770,329 | |
| Puma Biotechnology, Inc. (b)(c) | 1,151,925 | 42,275,648 | |
| Radius Health, Inc. (b)(c)(d) | 3,173,358 | 133,725,306 | |
| Regeneron Pharmaceuticals, Inc. (b) | 1,207,163 | 450,875,381 | |
| REGENXBIO, Inc. (b)(c) | 1,321,108 | 24,308,387 | |
| Regulus Therapeutics, Inc. (b) | 1,944,641 | 2,041,873 | |
| Repligen Corp. (b) | 878,615 | 27,685,159 | |
| Retrophin, Inc. (b) | 1,546,103 | 32,885,611 | |
| Sage Therapeutics, Inc. (b)(c) | 1,506,493 | 101,537,628 | |
| Sangamo Therapeutics, Inc. (b)(c) | 1,373,531 | 6,249,566 | |
| Sarepta Therapeutics, Inc. (b)(c) | 884,686 | 27,522,581 | |
| Seattle Genetics, Inc. (b)(c) | 3,011,490 | 197,704,319 | |
| Selecta Biosciences, Inc. | 226,900 | 2,967,852 | |
| Seres Therapeutics, Inc. (b)(d) | 1,028,440 | 9,955,299 | |
| Seres Therapeutics, Inc. (a)(b)(d) | 1,292,035 | 12,506,899 | |
| Spark Therapeutics, Inc. (b)(c) | 1,446,320 | 92,246,290 | |
| Spectrum Pharmaceuticals, Inc. (b) | 1,201,500 | 7,689,600 | |
| Stemline Therapeutics, Inc. (b)(d) | 2,032,699 | 14,228,893 | |
| Syndax Pharmaceuticals, Inc. (d) | 997,617 | 11,352,881 | |
| Syros Pharmaceuticals, Inc. (c) | 230,100 | 2,542,605 | |
| Syros Pharmaceuticals, Inc. (a) | 303,621 | 3,355,012 | |
| TESARO, Inc. (b)(c) | 1,162,907 | 219,056,792 | |
| TG Therapeutics, Inc. (b)(c) | 2,932,968 | 16,717,918 | |
| Threshold Pharmaceuticals, Inc. (b)(c) | 366,950 | 222,812 | |
| Trevena, Inc. (b) | 1,105,549 | 4,488,529 | |
| Ultragenyx Pharmaceutical, Inc. (b)(c) | 1,913,978 | 162,841,248 | |
| United Therapeutics Corp. (b) | 449,725 | 66,433,377 | |
| Vanda Pharmaceuticals, Inc. (b) | 788,492 | 11,236,011 | |
| Versartis, Inc. (b)(d) | 2,687,670 | 58,725,590 | |
| Vertex Pharmaceuticals, Inc. (b) | 2,844,688 | 257,785,627 | |
| Vical, Inc. (b) | 509,984 | 1,086,266 | |
| Vital Therapies, Inc. (b) | 1,191,791 | 5,541,828 | |
| Voyager Therapeutics, Inc. (b)(c)(d) | 2,674,974 | 34,640,913 | |
| Xencor, Inc. (b) | 1,462,342 | 36,339,199 | |
| Zafgen, Inc. (b)(d) | 2,712,346 | 10,768,014 | |
| 8,366,788,110 | |||
| Capital Markets - 0.1% | |||
| Asset Management & Custody Banks - 0.1% | |||
| RPI International Holdings LP (e) | 54,958 | 7,225,603 | |
| Diversified Financial Services - 0.0% | |||
| Other Diversified Financial Services - 0.0% | |||
| Bioverativ, Inc. (b) | 28,631 | 1,491,102 | |
| Health Care Equipment & Supplies - 0.3% | |||
| Health Care Equipment - 0.3% | |||
| Bellerophon Therapeutics, Inc. (b)(c) | 925,170 | 1,285,986 | |
| Novocure Ltd. (b)(c) | 697,189 | 5,298,636 | |
| Novocure Ltd. (a) | 701,713 | 5,333,019 | |
| Vermillion, Inc. (b)(c)(d) | 4,260,663 | 9,842,132 | |
| Zosano Pharma Corp. (b)(c)(d) | 1,177,516 | 3,155,743 | |
| 24,915,516 | |||
| Health Care Technology - 0.0% | |||
| Health Care Technology - 0.0% | |||
| NantHealth, Inc. (c) | 456,500 | 3,455,705 | |
| Life Sciences Tools & Services - 0.0% | |||
| Life Sciences Tools & Services - 0.0% | |||
| Transgenomic, Inc. (b) | 236,500 | 95,783 | |
| Personal Products - 0.0% | |||
| Personal Products - 0.0% | |||
| MYOS Corp. (b) | 33,334 | 92,335 | |
| Pharmaceuticals - 9.4% | |||
| Pharmaceuticals - 9.4% | |||
| Achaogen, Inc. (b)(c) | 1,553,725 | 36,434,851 | |
| Adimab LLC unit (b)(e)(f) | 1,954,526 | 48,315,883 | |
| Afferent Pharmaceuticals, Inc. rights 12/31/24 | 8,274,568 | 8,026,331 | |
| Aradigm Corp. (b) | 159,954 | 311,911 | |
| Avexis, Inc. (c)(d) | 1,451,481 | 89,004,815 | |
| Axsome Therapeutics, Inc. (b)(c)(d) | 1,339,325 | 6,093,929 | |
| Cempra, Inc. (b)(c)(d) | 4,149,374 | 14,107,872 | |
| Dermira, Inc. (b) | 1,885,091 | 63,508,716 | |
| Egalet Corp. (b)(c)(d) | 2,161,072 | 10,675,696 | |
| GW Pharmaceuticals PLC ADR (b)(c) | 925,725 | 115,511,966 | |
| Horizon Pharma PLC (b) | 2,873,840 | 46,125,132 | |
| Intra-Cellular Therapies, Inc. (b) | 529,782 | 6,913,655 | |
| Jazz Pharmaceuticals PLC (b) | 547,413 | 72,597,912 | |
| Jounce Therapeutics, Inc. (d) | 1,966,877 | 35,864,035 | |
| Kolltan Pharmaceuticals, Inc. rights(b) | 10,639,609 | 1,915,130 | |
| MyoKardia, Inc. (b)(d) | 2,644,390 | 32,129,339 | |
| Nektar Therapeutics (b) | 796,771 | 10,421,765 | |
| NeurogesX, Inc. (b)(d) | 2,550,000 | 26 | |
| Ocular Therapeutix, Inc. (b)(c) | 1,113,528 | 9,286,824 | |
| Pacira Pharmaceuticals, Inc. (b)(c) | 1,063,035 | 46,454,630 | |
| Paratek Pharmaceuticals, Inc. (b)(d) | 1,315,832 | 19,671,688 | |
| Reata Pharmaceuticals, Inc. (c) | 128,637 | 3,260,948 | |
| Repros Therapeutics, Inc. (b)(c) | 964,190 | 1,147,386 | |
| Stemcentrx, Inc. rights 12/31/21 | 876,163 | 2,479,541 | |
| Tetraphase Pharmaceuticals, Inc. (b) | 1,458,030 | 7,538,015 | |
| The Medicines Company (b)(c) | 1,707,508 | 89,507,569 | |
| TherapeuticsMD, Inc. (b) | 6,502,342 | 40,834,708 | |
| Theravance Biopharma, Inc. (b)(c) | 1,038,400 | 31,795,808 | |
| WAVE Life Sciences (b)(c)(d) | 1,421,761 | 42,795,006 | |
| Zogenix, Inc. (b)(c) | 957,199 | 9,907,010 | |
| Zogenix, Inc. warrants 7/27/17 (b) | 498,465 | 952 | |
| 902,639,049 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $6,945,414,977) | 9,306,703,203 | ||
| Preferred Stocks - 1.9% | |||
| Convertible Preferred Stocks - 1.8% | |||
| Biotechnology - 1.6% | |||
| Biotechnology - 1.6% | |||
| 23andMe, Inc. Series E (b)(e) | 1,505,457 | 14,994,352 | |
| Axcella Health, Inc. Series C (b)(e) | 1,642,272 | 28,230,656 | |
| Immunocore Ltd. Series A (b)(e) | 73,318 | 19,551,790 | |
| Moderna Therapeutics, Inc.: | |||
| Series D (e) | 2,074,940 | 18,217,973 | |
| Series E (e) | 2,698,970 | 23,696,957 | |
| Ovid Therapeutics, Inc. Series B (b)(e) | 1,039,201 | 7,014,607 | |
| RaNA Therapeutics LLC Series B (b)(e) | 5,634,091 | 11,155,500 | |
| Scholar Rock LLC Series B (b)(e) | 4,276,340 | 11,032,957 | |
| Twist Bioscience Corp.: | |||
| Series C (b)(e) | 8,133,875 | 11,143,409 | |
| Series D (b)(e) | 1,976,343 | 2,707,590 | |
| 147,745,791 | |||
| Health Care Providers & Services - 0.1% | |||
| Health Care Services - 0.1% | |||
| Allena Pharmaceuticals, Inc. Series C (b)(e) | 6,041,631 | 13,049,923 | |
| Health Care Technology - 0.1% | |||
| Health Care Technology - 0.1% | |||
| Codiak Biosciences, Inc.: | |||
| Series A (b)(e) | 856,366 | 2,260,806 | |
| Series B (b)(e) | 2,783,187 | 7,347,614 | |
| 9,608,420 | |||
| Pharmaceuticals - 0.0% | |||
| Pharmaceuticals - 0.0% | |||
| Afferent Pharmaceuticals, Inc. Series C (b)(e) | 8,274,568 | 3,889,047 | |
| TOTAL CONVERTIBLE PREFERRED STOCKS | 174,293,181 | ||
| Nonconvertible Preferred Stocks - 0.1% | |||
| Biotechnology - 0.1% | |||
| Biotechnology - 0.1% | |||
| Yumanity Holdings LLC Class A (e) | 588,700 | 4,544,764 | |
| TOTAL PREFERRED STOCKS | |||
| (Cost $142,468,759) | 178,837,945 | ||
| Money Market Funds - 13.5% | |||
| Fidelity Cash Central Fund, 0.60% (g) | 52,051,232 | 52,061,642 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (g)(h) | 1,244,345,269 | 1,244,594,138 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $1,296,450,995) | 1,296,655,780 | ||
| TOTAL INVESTMENT PORTFOLIO - 112.6% | |||
| (Cost $8,384,334,731) | 10,782,196,928 | ||
| NET OTHER ASSETS (LIABILITIES) - (12.6)% | (1,208,516,180) | ||
| NET ASSETS - 100% | $9,573,680,748 |
Legend
(a) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $52,013,494 or 0.5% of net assets.
(b) Non-income producing
(c) Security or a portion of the security is on loan at period end.
(d) Affiliated company
(e) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $234,379,429 or 2.4% of net assets.
(f) Investment is owned by a wholly-owned subsidiary (Subsidiary) that is treated as a corporation for U.S. tax purposes.
(g) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements [[, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm,]] are available on the SEC's website or upon request.
(h) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| 23andMe, Inc. Series E | 6/18/15 | $16,299,991 |
| Adimab LLC unit | 9/17/14 - 6/5/15 | $31,094,459 |
| Afferent Pharmaceuticals, Inc. Series C | 7/1/15 | $3,723,556 |
| Allena Pharmaceuticals, Inc. Series C | 11/25/15 | $16,010,322 |
| Axcella Health, Inc. Series C | 1/30/15 | $16,554,102 |
| Codiak Biosciences, Inc. Series A | 11/12/15 | $856,366 |
| Codiak Biosciences, Inc. Series B | 11/12/15 | $8,349,561 |
| Immunocore Ltd. Series A | 7/27/15 | $13,796,921 |
| Moderna Therapeutics, Inc. Series D | 11/6/13 | $9,158,071 |
| Moderna Therapeutics, Inc. Series E | 12/18/14 | $11,912,324 |
| Ovid Therapeutics, Inc. Series B | 8/10/15 | $6,474,222 |
| RaNA Therapeutics LLC Series B | 7/17/15 | $6,084,818 |
| RPI International Holdings LP | 5/21/15 | $6,479,548 |
| Scholar Rock LLC Series B | 12/17/15 | $12,829,020 |
| Twist Bioscience Corp. Series C | 5/29/15 | $12,199,999 |
| Twist Bioscience Corp. Series D | 1/8/16 | $4,240,639 |
| Yumanity Holdings LLC Class A | 2/8/16 | $3,978,847 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $312,647 |
| Fidelity Securities Lending Cash Central Fund | 15,322,899 |
| Total | $15,635,546 |
Other Affiliated Issuers
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:
| Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, end of period |
| Acceleron Pharma, Inc. | $86,934,749 | $7,035,765 | $-- | $-- | $98,051,765 |
| Achillion Pharmaceuticals, Inc. | 53,428,222 | -- | 48,765,811 | -- | -- |
| Acorda Therapeutics, Inc. | 122,669,402 | -- | 36,168,163 | -- | 62,530,736 |
| Adamas Pharmaceuticals, Inc. | 25,329,062 | -- | 3,141,515 | -- | 32,978,322 |
| Aegerion Pharmaceuticals, Inc. | 16,037,442 | 239,590 | 8,987,915 | -- | -- |
| Aimmune Therapeutics, Inc. | 34,782,272 | -- | -- | -- | -- |
| Aimmune Therapeutics, Inc. | 30,194,416 | 1,168,711 | 35,276,913 | -- | -- |
| Akebia Therapeutics, Inc. | 15,126,410 | -- | 10,735,338 | -- | -- |
| Albireo Pharma, Inc. (formerly Biodel, Inc.) | 1,108,019 | -- | 1,147,921 | -- | -- |
| Alder Biopharmaceuticals, Inc. | 61,021,384 | -- | 5,446,913 | -- | 67,312,513 |
| Aldeyra Therapeutics, Inc. | 4,698,688 | 1,261,680 | 362,664 | -- | 5,663,057 |
| Anacor Pharmaceuticals, Inc. | 166,052,633 | -- | 258,446,415 | -- | -- |
| Applied Genetic Technologies Corp. | 19,086,161 | -- | 10,091,157 | -- | -- |
| Ardelyx, Inc. | 32,015,636 | -- | 15,382,652 | -- | -- |
| ARIAD Pharmaceuticals, Inc. | 18,528,788 | 83,012,663 | 251,585,372 | -- | -- |
| Atara Biotherapeutics, Inc. | 34,013,045 | 13,980,802 | 13,959,949 | -- | 28,569,877 |
| Avexis, Inc. | 2,791,158 | 55,953,241 | 9,420,411 | -- | 89,004,815 |
| Axsome Therapeutics, Inc. | 14,869,527 | -- | 3,880,232 | -- | 6,093,929 |
| Bellerophon Therapeutics, Inc. | 2,363,614 | -- | 229,864 | -- | -- |
| Calithera Biosciences, Inc. | 10,659,924 | 82,309 | 5,803,541 | -- | -- |
| Cempra, Inc. | 73,996,023 | -- | 752,659 | -- | 14,107,872 |
| Cerulean Pharma, Inc. | 5,109,587 | -- | 5,482,438 | -- | -- |
| Chiasma, Inc. | 15,108,345 | -- | -- | -- | -- |
| Chiasma, Inc. | 1,257,093 | -- | 14,180 | -- | 2,641,278 |
| Chiasma, Inc. warrants | 2,225,547 | -- | -- | -- | 105,173 |
| Cidara Therapeutics, Inc. | 869,736 | 597,920 | -- | -- | 1,051,200 |
| Cidara Therapeutics, Inc. | 10,689,196 | -- | -- | -- | 7,680,859 |
| CTI BioPharma Corp. | 11,419,512 | -- | 8,652,966 | -- | -- |
| Cytokinetics, Inc. | 9,785,651 | 10,715,661 | 2,730,611 | -- | 23,813,727 |
| Cytokinetics, Inc. warrants 6/25/17 | 1,216,385 | -- | -- | -- | 3,409,874 |
| Dermira, Inc. | 45,213,419 | 1,534,400 | 23,371,361 | -- | -- |
| Dermira, Inc. | 20,193,757 | -- | -- | -- | -- |
| Dynavax Technologies Corp. | 32,117,262 | 3,307,054 | 15,756,155 | -- | -- |
| Egalet Corp. | 16,940,202 | -- | 1,667,426 | -- | 10,675,696 |
| Epirus Biopharmaceuticals, Inc. | 3,259,269 | -- | 1,081,092 | -- | -- |
| Epizyme, Inc. | 48,400,904 | 2,309,147 | -- | -- | 81,256,291 |
| Esperion Therapeutics, Inc. | 19,886,474 | -- | 10,724,699 | -- | -- |
| Fate Therapeutics, Inc. | 3,098,244 | -- | -- | -- | -- |
| Fibrocell Science, Inc. | 7,518,206 | -- | 2,260,702 | -- | 1,702,568 |
| Geron Corp. | 38,099,090 | -- | -- | -- | 33,988,815 |
| Global Blood Therapeutics, Inc. | 42,720,642 | 2,083,125 | 10,546,251 | -- | 68,660,137 |
| Histogenics Corp. | 3,226,564 | -- | 218,992 | -- | 1,891,085 |
| Horizon Pharma PLC | 161,679,838 | 430,984 | 114,415,872 | -- | -- |
| Immune Design Corp. | 13,130,527 | -- | 11,625,157 | -- | -- |
| ImmunoGen, Inc. | 35,142,584 | -- | 18,470,993 | -- | -- |
| Immunomedics, Inc. | 21,388,559 | -- | 18,764,526 | -- | -- |
| Jounce Therapeutics, Inc. | -- | -- | -- | -- | 35,864,035 |
| Kalvista Pharmaceuticals, Inc. (formerly Carbylan Therapeutics, Inc.) | 1,623,902 | -- | 1,691,270 | -- | -- |
| Karyopharm Therapeutics, Inc. | 21,069,579 | -- | 4,241,639 | -- | 32,829,502 |
| Kura Oncology, Inc. | 8,510,850 | -- | 628,687 | -- | 15,816,712 |
| La Jolla Pharmaceutical Co. | 23,359,004 | 5,180,451 | 10,604,552 | -- | 38,332,223 |
| Loxo Oncology, Inc. | 30,277,492 | 9,885,992 | -- | -- | 86,708,884 |
| Macrogenics, Inc. | 48,118,225 | 5,205,197 | 4,329,743 | -- | 62,162,107 |
| MediciNova, Inc. | 14,935,920 | -- | 10,646,676 | -- | -- |
| Minerva Neurosciences, Inc. | 8,980,027 | 16,212,545 | -- | -- | 29,051,873 |
| Miragen Therapeutics, Inc. | -- | 15,785,186 | -- | -- | 32,333,809 |
| Mirna Therapeutics, Inc. | 4,977,112 | -- | 2,115,141 | -- | -- |
| MyoKardia, Inc. | 2,690,900 | 1,554,000 | 1,049,943 | -- | 32,129,339 |
| MyoKardia, Inc. | 15,118,850 | -- | -- | -- | -- |
| NeurogesX, Inc. | 22,950 | -- | -- | -- | 26 |
| Novavax, Inc. | 71,812,780 | -- | 26,439,228 | -- | -- |
| Ocular Therapeutix, Inc. | 13,205,293 | -- | 4,536,726 | -- | -- |
| Ophthotech Corp. | 151,145,142 | -- | 80,049,756 | -- | -- |
| Oragenics, Inc. | 2,697,973 | -- | 730,371 | -- | -- |
| Orexigen Therapeutics, Inc. | 6,796,515 | -- | 4,606,358 | -- | -- |
| Osiris Therapeutics, Inc. | 13,330,344 | -- | 9,812,134 | -- | -- |
| Paratek Pharmaceuticals, Inc. | 26,894,817 | 4,035 | 6,685,763 | -- | 19,671,688 |
| Parnell Pharmaceuticals Holdings Ltd. | 2,042,822 | -- | 507,318 | -- | -- |
| Portola Pharmaceuticals, Inc. | 82,839,265 | 6,141,175 | 13,143,681 | -- | -- |
| Progenics Pharmaceuticals, Inc. | 18,619,620 | 2,669,748 | 9,997,180 | -- | -- |
| ProNai Therapeutics, Inc. | 9,544,132 | -- | 3,474,807 | -- | -- |
| ProQR Therapeutics BV | 6,555,071 | -- | 5,490,020 | -- | -- |
| Radius Health, Inc. | 121,212,899 | -- | 41,891,637 | -- | 133,725,306 |
| REGENXBIO, Inc. | 21,085,809 | 10,770,178 | 8,718,202 | -- | -- |
| Repligen Corp. | 45,843,527 | -- | 24,745,805 | -- | -- |
| Repros Therapeutics, Inc. | 1,438,077 | -- | 724,422 | -- | -- |
| Retrophin, Inc. | 15,496,086 | 22,667,684 | 17,045,383 | -- | -- |
| Seres Therapeutics, Inc. | 23,767,248 | -- | -- | -- | 9,955,299 |
| Seres Therapeutics, Inc. | 29,858,929 | -- | -- | -- | 12,506,899 |
| Sophiris Bio, Inc. | 2,292,687 | -- | 1,723,488 | -- | -- |
| Spark Therapeutics, Inc. | 46,079,755 | -- | -- | -- | -- |
| Spectrum Pharmaceuticals, Inc. | 17,645,628 | -- | 11,050,481 | -- | -- |
| Stemline Therapeutics, Inc. | 7,278,968 | 8,860,000 | 4,265,024 | -- | 14,228,893 |
| Sunesis Pharmaceuticals, Inc. | 3,189,821 | -- | 2,354,909 | -- | -- |
| Syndax Pharmaceuticals, Inc. | -- | 6,346,800 | 5,871,692 | -- | 11,352,881 |
| TESARO, Inc. | 86,982,891 | 48,014,340 | 109,777,349 | -- | -- |
| TG Therapeutics, Inc. | 41,935,144 | -- | 14,275,181 | -- | -- |
| Tobira Therapeutics, Inc. | 8,784,843 | -- | 10,550,026 | -- | -- |
| Ultragenyx Pharmaceutical, Inc. | 120,575,888 | -- | 4,348,470 | -- | -- |
| Vermillion, Inc. | 7,038,842 | -- | 133,239 | -- | 9,842,132 |
| Versartis, Inc. | 14,217,283 | 6,312,345 | -- | -- | 58,725,590 |
| Vical, Inc. | 2,152,591 | -- | 271,340 | -- | -- |
| Vitae Pharmaceuticals, Inc. | 19,712,228 | -- | 37,817,621 | -- | -- |
| Vital Therapies, Inc. | 22,394,637 | -- | 11,558,638 | -- | -- |
| Voyager Therapeutics, Inc. | 12,605,575 | 910,725 | -- | -- | 34,640,913 |
| Voyager Therapeutics, Inc. | 11,694,160 | -- | -- | -- | -- |
| WAVE Life Sciences | 14,044,906 | -- | -- | -- | -- |
| WAVE Life Sciences | 10,380,406 | 616,129 | 5,243,832 | -- | 42,795,006 |
| Xencor, Inc. | 25,227,675 | -- | 16,764,391 | -- | -- |
| Xenon Pharmaceuticals, Inc. | 5,871,198 | -- | 5,437,113 | -- | -- |
| XOMA Corp. | 5,748,718 | -- | 6,201,870 | -- | -- |
| Zafgen, Inc. | 16,979,286 | -- | -- | -- | 10,768,014 |
| Zogenix, Inc. | 25,410,172 | -- | 13,932,400 | -- | -- |
| Zogenix, Inc. warrants 7/27/17 | 17,676 | -- | -- | -- | -- |
| Zosano Pharma Corp. | 2,871,696 | -- | 37,570 | -- | 3,155,743 |
| Total | $2,770,407,002 | $350,849,582 | $1,520,889,902 | $-- | $1,367,786,463 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $9,306,703,203 | $9,134,156,042 | $104,584,647 | $67,962,514 |
| Preferred Stocks | 178,837,945 | -- | -- | 178,837,945 |
| Money Market Funds | 1,296,655,780 | 1,296,655,780 | -- | -- |
| Total Investments in Securities: | $10,782,196,928 | $10,430,811,822 | $104,584,647 | $246,800,459 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:
| Investments in Securities: | |
| Other Investments in Securities | |
| Beginning Balance | $44,969,441 |
| Total Realized Gain (Loss) | (446,345) |
| Total Unrealized Gain (Loss) | 11,149,076 |
| Cost of Purchases | 12,267,392 |
| Proceeds of Sales | -- |
| Amortization/Accretion | -- |
| Transfers in to Level 3 | 22,950 |
| Transfers out of Level 3 | -- |
| Ending Balance | $67,962,514 |
| The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2017 | $10,702,761 |
| Preferred Stocks | |
| Beginning Balance | $181,689,140 |
| Total Realized Gain (Loss) | 32,922,764 |
| Total Unrealized Gain (Loss) | 73,723,520 |
| Cost of Purchases | 24,793,951 |
| Proceeds of Sales | (134,291,430) |
| Amortization/Accretion | -- |
| Transfers in to Level 3 | -- |
| Transfers out of Level 3 | -- |
| Ending Balance | $178,837,945 |
| The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2017 | $54,806,359 |
The information used in the above reconciliations represents fiscal year to date activity for any Investments in Securities identified as using Level 3 inputs at either the beginning or the end of the current fiscal period. Transfers in or out of Level 3 represent the beginning value of any Security or Instrument where a change in the pricing level occurred from the beginning to the end of the period. The cost of purchases and the proceeds of sales may include securities received or delivered through corporate actions or exchanges. Realized and unrealized gains (losses) disclosed in the reconciliations are included in Net Gain (Loss) on the Fund's Statement of Operations.
See accompanying notes which are an integral part of the financial statements.
Biotechnology Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $1,204,591,134) — See accompanying schedule: Unaffiliated issuers (cost $5,584,445,533) | $8,117,754,685 | |
| Fidelity Central Funds (cost $1,296,450,995) | 1,296,655,780 | |
| Other affiliated issuers (cost $1,503,438,203) | 1,367,786,463 | |
| Total Investments (cost $8,384,334,731) | $10,782,196,928 | |
| Restricted cash | 148,127 | |
| Receivable for investments sold | 111,923,319 | |
| Receivable for fund shares sold | 13,136,129 | |
| Dividends receivable | 6,260,196 | |
| Distributions receivable from Fidelity Central Funds | 770,292 | |
| Prepaid expenses | 37,573 | |
| Other receivables | 495,993 | |
| Total assets | 10,914,968,557 | |
| Liabilities | ||
| Payable for investments purchased | $71,197,063 | |
| Payable for fund shares redeemed | 19,507,206 | |
| Accrued management fee | 4,210,158 | |
| Other affiliated payables | 1,433,073 | |
| Other payables and accrued expenses | 584,766 | |
| Collateral on securities loaned | 1,244,355,543 | |
| Total liabilities | 1,341,287,809 | |
| Net Assets | $9,573,680,748 | |
| Net Assets consist of: | ||
| Paid in capital | $7,368,460,568 | |
| Accumulated net investment loss | (3,400,876) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (189,254,847) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 2,397,875,903 | |
| Net Assets, for 47,112,297 shares outstanding | $9,573,680,748 | |
| Net Asset Value, offering price and redemption price per share ($9,573,680,748 ÷ 47,112,297 shares) | $203.21 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $15,470,211 | |
| Income from Fidelity Central Funds (including $15,322,899 from security lending) | 15,635,546 | |
| Total income | 31,105,757 | |
| Expenses | ||
| Management fee | $54,304,779 | |
| Transfer agent fees | 17,349,761 | |
| Accounting and security lending fees | 1,538,558 | |
| Custodian fees and expenses | 303,994 | |
| Independent trustees' fees and expenses | 219,593 | |
| Registration fees | 129,239 | |
| Audit | 62,759 | |
| Legal | 161,024 | |
| Miscellaneous | 161,325 | |
| Total expenses before reductions | 74,231,032 | |
| Expense reductions | (437,152) | 73,793,880 |
| Net investment income (loss) | (42,688,123) | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 288,458,011 | |
| Fidelity Central Funds | 47,142 | |
| Other affiliated issuers | (430,033,255) | |
| Foreign currency transactions | (873,845) | |
| Total net realized gain (loss) | (142,401,947) | |
| Change in net unrealized appreciation (depreciation) on: Investment securities (net of decrease in deferred foreign taxes of $53,009) | 2,691,747,938 | |
| Assets and liabilities in foreign currencies | 8,634 | |
| Total change in net unrealized appreciation (depreciation) | 2,691,756,572 | |
| Net gain (loss) | 2,549,354,625 | |
| Net increase (decrease) in net assets resulting from operations | $2,506,666,502 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $(42,688,123) | $(57,219,757) |
| Net realized gain (loss) | (142,401,947) | 1,113,277,737 |
| Change in net unrealized appreciation (depreciation) | 2,691,756,572 | (5,765,260,488) |
| Net increase (decrease) in net assets resulting from operations | 2,506,666,502 | (4,709,202,508) |
| Distributions to shareholders from net realized gain | (351,244,588) | (935,222,849) |
| Share transactions | ||
| Proceeds from sales of shares | 1,517,002,797 | 6,221,332,903 |
| Reinvestment of distributions | 335,307,225 | 894,323,787 |
| Cost of shares redeemed | (4,158,007,769) | (5,026,035,970) |
| Net increase (decrease) in net assets resulting from share transactions | (2,305,697,747) | 2,089,620,720 |
| Redemption fees | 358,003 | 1,350,923 |
| Total increase (decrease) in net assets | (149,917,830) | (3,553,453,714) |
| Net Assets | ||
| Beginning of period | 9,723,598,578 | 13,277,052,292 |
| End of period | $9,573,680,748 | $9,723,598,578 |
| Other Information | ||
| Accumulated net investment loss end of period | $(3,400,876) | $(263,824) |
| Shares | ||
| Sold | 8,341,359 | 24,881,387 |
| Issued in reinvestment of distributions | 1,903,424 | 3,692,321 |
| Redeemed | (23,151,337) | (22,091,457) |
| Net increase (decrease) | (12,906,554) | 6,482,251 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Biotechnology Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $162.01 | $248.00 | $221.45 | $120.51 | $97.78 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | (.78) | (.95) | (.87) | (.54) | (.16) |
| Net realized and unrealized gain (loss) | 47.93 | (69.22) | 51.24 | 101.91 | 29.36 |
| Total from investment operations | 47.15 | (70.17) | 50.37 | 101.37 | 29.20 |
| Distributions from net realized gain | (5.96) | (15.84) | (23.84) | (.46) | (6.48) |
| Total distributions | (5.96) | (15.84) | (23.84) | (.46) | (6.48) |
| Redemption fees added to paid in capitalB | .01 | .02 | .02 | .03 | .01 |
| Net asset value, end of period | $203.21 | $162.01 | $248.00 | $221.45 | $120.51 |
| Total ReturnC | 29.67% | (30.35)% | 24.21% | 84.25% | 31.78% |
| Ratios to Average Net AssetsD,E | |||||
| Expenses before reductions | .75% | .73% | .74% | .76% | .81% |
| Expenses net of fee waivers, if any | .75% | .73% | .74% | .76% | .80% |
| Expenses net of all reductions | .74% | .73% | .74% | .75% | .79% |
| Net investment income (loss) | (.43)% | (.39)% | (.41)% | (.32)% | (.15)% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $9,573,681 | $9,723,599 | $13,277,052 | $11,033,313 | $3,450,725 |
| Portfolio turnover rateF | 28% | 35% | 61% | 35% | 42% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
D Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
E Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
F Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Health Care Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Health Care Portfolio | 16.43% | 20.06% | 12.97% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Health Care Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $33,867 | Health Care Portfolio | |
| $20,834 | S&P 500® Index | |
Health Care Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union –recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Eddie Yoon: For the year, the fund advanced 16.43%, modestly lagging the 17.33% result of the MSCI U.S. IMI Health Care 25/50 Index and trailing the broader S&P 500® index. The sector posted strong gains, as equipment names benefited from solid fundamentals, including strong employment and health care utilization trends. A focus on innovation boosted these firms, while merger-and-acquisition (M&A) activity benefited those in life sciences tools & services. Security selection in pharmaceuticals was by far the largest detractor from the fund’s performance versus the MSCI sector index, largely due to a sizable non-index position in Israel-based Teva Pharmaceutical Industries. Our stake returned -41%, as Teva’s stock price was pressured by significant concern over the pricing environment for generic drugs and the durability of the firm’s key multiple sclerosis drug, Copaxone®. We sold our position in Teva by period end. Not owning Merck, a sizeable index component whose stock benefited in part by investor optimism when the firm sought surprisingly early approval of its immunotherapy drug Keytruda® to treat lung cancer, also hurt the fund’s relative results. An overweighting in Allergan also hampered relative performance. Conversely, picks in biotechnology helped, including a non-index stake in oncology-focused firm Tesaro, the fund’s largest relative contributor. Among other successes, the company announced that the U.S. Food and Drug Administration advanced the review for the company’s potential treatment for ovarian cancer. Elsewhere, security selection and a sizable overweighting in health care equipment segment was a big plus. Medical device maker Boston Scientific was a notable contributor from this industry.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Health Care Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Amgen, Inc. | 9.1 | 7.0 |
| Allergan PLC | 7.5 | 7.7 |
| Medtronic PLC | 7.1 | 10.1 |
| UnitedHealth Group, Inc. | 5.2 | 3.2 |
| Boston Scientific Corp. | 5.2 | 5.3 |
| Alexion Pharmaceuticals, Inc. | 4.3 | 3.0 |
| Bristol-Myers Squibb Co. | 4.2 | 1.4 |
| Vertex Pharmaceuticals, Inc. | 3.5 | 3.7 |
| Anthem, Inc. | 3.5 | 1.6 |
| Humana, Inc. | 2.5 | 0.4 |
| 52.1 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Biotechnology | 30.2% | |
| Health Care Equipment & Supplies | 23.2% | |
| Health Care Providers & Services | 20.5% | |
| Pharmaceuticals | 18.6% | |
| Health Care Technology | 3.0% | |
| All Others* | 4.5% | |
| As of August 31, 2016 | ||
| Biotechnology | 28.4% | |
| Health Care Equipment & Supplies | 28.4% | |
| Pharmaceuticals | 20.7% | |
| Health Care Providers & Services | 14.8% | |
| Health Care Technology | 3.6% | |
| All Others* | 4.1% | |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
* Includes short-term investments and net other assets (liabilities).
Health Care Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 98.6% | |||
| Shares | Value | ||
| Biotechnology - 30.1% | |||
| Biotechnology - 30.1% | |||
| Ablynx NV (a)(b) | 2,040,000 | $25,404,624 | |
| AC Immune SA (b) | 600,000 | 7,464,000 | |
| ACADIA Pharmaceuticals, Inc. (a) | 81,012 | 3,087,367 | |
| Acorda Therapeutics, Inc. (a) | 1,517,376 | 40,134,595 | |
| Advanced Accelerator Applications SA sponsored ADR (a) | 506,500 | 19,216,610 | |
| Advaxis, Inc. (a)(b) | 1,700,000 | 14,943,000 | |
| Alexion Pharmaceuticals, Inc. (a) | 2,180,000 | 286,125,000 | |
| Alnylam Pharmaceuticals, Inc. (a) | 531,977 | 27,471,292 | |
| Amgen, Inc. | 3,420,000 | 603,732,601 | |
| Amicus Therapeutics, Inc. (a)(b) | 3,800,000 | 24,662,000 | |
| Array BioPharma, Inc. (a) | 2,214,500 | 25,466,750 | |
| Ascendis Pharma A/S sponsored ADR (a) | 597,796 | 17,676,828 | |
| BeiGene Ltd. ADR (b) | 261,157 | 10,177,288 | |
| BioMarin Pharmaceutical, Inc. (a) | 690,000 | 64,811,700 | |
| bluebird bio, Inc. (a) | 174,000 | 15,251,100 | |
| Blueprint Medicines Corp. (a) | 650,000 | 22,867,000 | |
| Celgene Corp. (a) | 170,000 | 20,996,700 | |
| Cellectis SA sponsored ADR (a)(b) | 669,000 | 14,925,390 | |
| China Biologic Products, Inc. (a) | 220,000 | 21,604,000 | |
| Curis, Inc. (a) | 3,800,000 | 8,778,000 | |
| Cytokinetics, Inc. (a) | 1,128,800 | 11,965,280 | |
| CytomX Therapeutics, Inc. (a) | 423,577 | 5,294,713 | |
| Five Prime Therapeutics, Inc. (a) | 360,000 | 16,513,200 | |
| Galapagos Genomics NV sponsored ADR (a) | 412,156 | 29,077,606 | |
| Heron Therapeutics, Inc. (a)(b) | 690,143 | 9,869,045 | |
| Incyte Corp. (a) | 140,000 | 18,634,000 | |
| Insmed, Inc. (a) | 2,800,000 | 44,604,000 | |
| Intercept Pharmaceuticals, Inc. (a) | 255,946 | 32,656,150 | |
| La Jolla Pharmaceutical Co. (a) | 108,400 | 3,632,484 | |
| Loxo Oncology, Inc. (a) | 165,752 | 7,366,019 | |
| Neurocrine Biosciences, Inc. (a) | 770,000 | 34,003,200 | |
| Proteostasis Therapeutics, Inc. | 573,400 | 8,342,970 | |
| Prothena Corp. PLC (a) | 380,271 | 22,302,894 | |
| Puma Biotechnology, Inc. (a) | 791,947 | 29,064,455 | |
| Regeneron Pharmaceuticals, Inc. (a) | 68,000 | 25,398,000 | |
| Spark Therapeutics, Inc. (a) | 493,238 | 31,458,720 | |
| TESARO, Inc. (a) | 430,000 | 80,999,100 | |
| Ultragenyx Pharmaceutical, Inc. (a) | 628,000 | 53,430,240 | |
| Vertex Pharmaceuticals, Inc. (a) | 2,550,000 | 231,081,000 | |
| Xencor, Inc. (a) | 900,000 | 22,365,000 | |
| 1,992,853,921 | |||
| Capital Markets - 0.4% | |||
| Asset Management & Custody Banks - 0.4% | |||
| RPI International Holdings LP (c) | 199,753 | 26,262,526 | |
| Diversified Consumer Services - 0.3% | |||
| Specialized Consumer Services - 0.3% | |||
| Carriage Services, Inc. | 736,600 | 18,982,182 | |
| Health Care Equipment & Supplies - 23.2% | |||
| Health Care Equipment - 21.5% | |||
| Atricure, Inc. (a) | 1,550,000 | 28,287,500 | |
| Boston Scientific Corp. (a) | 14,000,000 | 343,700,000 | |
| DexCom, Inc. (a) | 1,040,000 | 81,286,400 | |
| Genmark Diagnostics, Inc. (a)(d) | 2,500,000 | 28,300,000 | |
| Insulet Corp. (a) | 1,500,000 | 65,340,000 | |
| Integra LifeSciences Holdings Corp. (a) | 880,000 | 37,611,200 | |
| Intuitive Surgical, Inc. (a) | 220,000 | 162,140,000 | |
| Medtronic PLC | 5,800,000 | 469,278,000 | |
| NxStage Medical, Inc. (a) | 780,000 | 22,276,800 | |
| Penumbra, Inc. (a)(b) | 900,000 | 69,120,000 | |
| Wright Medical Group NV (a) | 3,100,000 | 86,428,000 | |
| Zimmer Biomet Holdings, Inc. | 260,000 | 30,440,800 | |
| 1,424,208,700 | |||
| Health Care Supplies - 1.7% | |||
| The Cooper Companies, Inc. | 339,100 | 67,528,374 | |
| The Spectranetics Corp. (a) | 1,600,000 | 44,520,000 | |
| 112,048,374 | |||
| TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 1,536,257,074 | ||
| Health Care Providers & Services - 20.3% | |||
| Health Care Distributors & Services - 1.1% | |||
| Amplifon SpA | 1,600,000 | 17,136,854 | |
| EBOS Group Ltd. | 3,060,000 | 40,776,183 | |
| McKesson Corp. | 55,000 | 8,257,150 | |
| Oriola-KD Oyj | 2,000,000 | 8,348,072 | |
| 74,518,259 | |||
| Health Care Facilities - 2.9% | |||
| HCA Holdings, Inc. (a) | 1,180,000 | 102,943,200 | |
| Universal Health Services, Inc. Class B | 700,000 | 87,920,000 | |
| 190,863,200 | |||
| Health Care Services - 3.1% | |||
| American Renal Associates Holdings, Inc. | 1,060,000 | 23,956,000 | |
| Envision Healthcare Corp. (a) | 1,219,100 | 85,337,000 | |
| Premier, Inc. (a) | 983,400 | 30,908,262 | |
| Teladoc, Inc. (a) | 2,000,000 | 44,100,000 | |
| United Drug PLC (United Kingdom) | 2,700,000 | 23,100,284 | |
| 207,401,546 | |||
| Managed Health Care - 13.2% | |||
| Anthem, Inc. | 1,400,000 | 230,748,000 | |
| Cigna Corp. | 900,000 | 134,010,000 | |
| Humana, Inc. | 770,000 | 162,662,500 | |
| UnitedHealth Group, Inc. | 2,100,000 | 347,298,000 | |
| 874,718,500 | |||
| TOTAL HEALTH CARE PROVIDERS & SERVICES | 1,347,501,505 | ||
| Health Care Technology - 3.0% | |||
| Health Care Technology - 3.0% | |||
| athenahealth, Inc. (a)(b) | 680,000 | 80,192,400 | |
| Castlight Health, Inc. (a)(d) | 1,875,650 | 6,658,558 | |
| Castlight Health, Inc. Class B (a)(b)(d) | 1,846,600 | 6,555,430 | |
| Evolent Health, Inc. (a)(b) | 900,000 | 17,730,000 | |
| HealthStream, Inc. (a) | 1,315,300 | 32,185,391 | |
| Medidata Solutions, Inc. (a) | 1,000,000 | 55,920,000 | |
| 199,241,779 | |||
| Internet Software & Services - 0.4% | |||
| Internet Software & Services - 0.4% | |||
| Benefitfocus, Inc. (a)(b) | 1,000,000 | 26,550,000 | |
| Life Sciences Tools & Services - 1.4% | |||
| Life Sciences Tools & Services - 1.4% | |||
| Agilent Technologies, Inc. | 1,800,000 | 92,340,000 | |
| Pharmaceuticals - 18.6% | |||
| Pharmaceuticals - 18.6% | |||
| Aclaris Therapeutics, Inc. (a) | 500,000 | 15,615,000 | |
| Akorn, Inc. (a) | 500,000 | 10,405,000 | |
| Allergan PLC | 2,028,000 | 496,494,960 | |
| Bristol-Myers Squibb Co. | 4,920,000 | 279,013,200 | |
| Catalent, Inc. (a) | 2,400,000 | 68,880,000 | |
| Dechra Pharmaceuticals PLC | 2,000,000 | 39,955,370 | |
| Eisai Co. Ltd. | 700,000 | 39,260,314 | |
| GlaxoSmithKline PLC | 4,000,000 | 81,851,685 | |
| Jazz Pharmaceuticals PLC (a) | 400,000 | 53,048,000 | |
| Jiangsu Hengrui Medicine Co. Ltd. (A Shares) | 4,036,700 | 29,618,043 | |
| The Medicines Company (a) | 880,000 | 46,129,600 | |
| TherapeuticsMD, Inc. (a)(b) | 5,880,400 | 36,928,912 | |
| Theravance Biopharma, Inc. (a)(b) | 1,220,336 | 37,366,688 | |
| 1,234,566,772 | |||
| Professional Services - 0.9% | |||
| Human Resource & Employment Services - 0.9% | |||
| WageWorks, Inc. (a) | 800,000 | 61,600,000 | |
| TOTAL COMMON STOCKS | |||
| (Cost $5,165,149,167) | 6,536,155,759 | ||
| Convertible Preferred Stocks - 0.6% | |||
| Biotechnology - 0.1% | |||
| Biotechnology - 0.1% | |||
| 10X Genomics, Inc. Series C (c) | 2,233,040 | 8,775,847 | |
| Health Care Providers & Services - 0.2% | |||
| Health Care Services - 0.2% | |||
| 1Life Healthcare, Inc. Series G (a)(c) | 1,639,892 | 10,839,686 | |
| Software - 0.3% | |||
| Application Software - 0.3% | |||
| Outset Medical, Inc. Series B (a)(c) | 8,159,125 | 21,144,372 | |
| TOTAL CONVERTIBLE PREFERRED STOCKS | |||
| (Cost $39,300,001) | 40,759,905 | ||
| Money Market Funds - 2.9% | |||
| Fidelity Cash Central Fund, 0.60% (e) | 49,432,022 | 49,441,908 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (e)(f) | 140,325,163 | 140,353,228 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $189,772,012) | 189,795,136 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.1% | |||
| (Cost $5,394,221,180) | 6,766,710,800 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.1)% | (137,829,142) | ||
| NET ASSETS - 100% | $6,628,881,658 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $67,022,431 or 1.0% of net assets.
(d) Affiliated company
(e) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(f) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| 10X Genomics, Inc. Series C | 2/23/16 | $10,000,000 |
| 1Life Healthcare, Inc. Series G | 4/10/14 | $10,800,001 |
| Outset Medical, Inc. Series B | 5/5/15 | $18,500,000 |
| RPI International Holdings LP | 5/21/15 - 3/23/16 | $26,504,031 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $191,921 |
| Fidelity Securities Lending Cash Central Fund | 2,404,262 |
| Total | $2,596,183 |
Other Affiliated Issuers
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:
| Affiliate | Value, beginning of period | Purchases | Sales Proceeds* | Dividend Income | Value, end of period |
| Atricure, Inc. | $-- | $31,881,321 | $6,410,194 | $-- | $-- |
| Carriage Services, Inc. | 17,518,500 | -- | 2,688,618 | 134,694 | -- |
| Castlight Health, Inc. | 6,227,158 | -- | -- | -- | 6,658,558 |
| Castlight Health, Inc. Class B | 998,284 | 6,096,658 | 853,117 | -- | 6,555,430 |
| Connecture, Inc. | 5,980,000 | -- | 3,320,001 | -- | -- |
| Curis, Inc. | 10,726,504 | 3,246,245 | 8,923,074 | -- | -- |
| Genmark Diagnostics, Inc. | 11,413,314 | 3,824,949 | 3,859,575 | -- | 28,300,000 |
| HealthStream, Inc. | 41,340,000 | -- | 17,475,473 | -- | -- |
| Insmed, Inc. | 35,104,625 | 2,606,707 | 3,791,532 | -- | -- |
| Neovasc, Inc. | 16,758,000 | -- | 1,823,069 | -- | -- |
| The Spectranetics Corp. | 28,360,000 | 5,081,755 | 16,109,758 | -- | -- |
| Total | $174,426,385 | $52,737,635 | $65,254,411 | $134,694 | $41,513,988 |
* Includes the value of securities delivered through in-kind transactions, if applicable.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $6,536,155,759 | $6,428,041,548 | $81,851,685 | $26,262,526 |
| Convertible Preferred Stocks | 40,759,905 | -- | -- | 40,759,905 |
| Money Market Funds | 189,795,136 | 189,795,136 | -- | -- |
| Total Investments in Securities: | $6,766,710,800 | $6,617,836,684 | $81,851,685 | $67,022,431 |
See accompanying notes which are an integral part of the financial statements.
Health Care Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $134,727,992) — See accompanying schedule: Unaffiliated issuers (cost $5,168,880,577) | $6,535,401,676 | |
| Fidelity Central Funds (cost $189,772,012) | 189,795,136 | |
| Other affiliated issuers (cost $35,568,591) | 41,513,988 | |
| Total Investments (cost $5,394,221,180) | $6,766,710,800 | |
| Receivable for investments sold | 14,080,592 | |
| Receivable for fund shares sold | 8,449,373 | |
| Dividends receivable | 6,986,371 | |
| Distributions receivable from Fidelity Central Funds | 166,745 | |
| Prepaid expenses | 28,230 | |
| Other receivables | 365,078 | |
| Total assets | 6,796,787,189 | |
| Liabilities | ||
| Payable for investments purchased | $15,444,267 | |
| Payable for fund shares redeemed | 7,801,612 | |
| Accrued management fee | 2,939,046 | |
| Other affiliated payables | 961,547 | |
| Other payables and accrued expenses | 436,556 | |
| Collateral on securities loaned | 140,322,503 | |
| Total liabilities | 167,905,531 | |
| Net Assets | $6,628,881,658 | |
| Net Assets consist of: | ||
| Paid in capital | $5,396,212,788 | |
| Accumulated net investment loss | (353,910) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (139,453,458) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 1,372,476,238 | |
| Net Assets, for 31,730,296 shares outstanding | $6,628,881,658 | |
| Net Asset Value, offering price and redemption price per share ($6,628,881,658 ÷ 31,730,296 shares) | $208.91 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends (including $134,694 earned from other affiliated issuers) | $58,560,531 | |
| Income from Fidelity Central Funds (including $2,404,262 from security lending) | 2,596,183 | |
| Total income | 61,156,714 | |
| Expenses | ||
| Management fee | $39,201,543 | |
| Transfer agent fees | 11,623,899 | |
| Accounting and security lending fees | 1,204,535 | |
| Custodian fees and expenses | 183,794 | |
| Independent trustees' fees and expenses | 159,106 | |
| Appreciation in deferred trustee compensation account | 193 | |
| Registration fees | 77,645 | |
| Audit | 48,481 | |
| Legal | 118,709 | |
| Interest | 7,723 | |
| Miscellaneous | 111,743 | |
| Total expenses before reductions | 52,737,371 | |
| Expense reductions | (226,315) | 52,511,056 |
| Net investment income (loss) | 8,645,658 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (38,458,770) | |
| Redemptions in-kind with affiliated entities (including gain from Other affiliated issuers of $3,271,366) | 90,840,956 | |
| Fidelity Central Funds | 4,207 | |
| Other affiliated issuers | (47,685,312) | |
| Foreign currency transactions | (203,298) | |
| Total net realized gain (loss) | 4,497,783 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 1,003,543,417 | |
| Assets and liabilities in foreign currencies | 14,287 | |
| Total change in net unrealized appreciation (depreciation) | 1,003,557,704 | |
| Net gain (loss) | 1,008,055,487 | |
| Net increase (decrease) in net assets resulting from operations | $1,016,701,145 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $8,645,658 | $(3,224,002) |
| Net realized gain (loss) | 4,497,783 | 731,883,746 |
| Change in net unrealized appreciation (depreciation) | 1,003,557,704 | (2,182,058,591) |
| Net increase (decrease) in net assets resulting from operations | 1,016,701,145 | (1,453,398,847) |
| Distributions to shareholders from net investment income | (7,826,452) | – |
| Distributions to shareholders from net realized gain | (36,346,185) | (1,001,012,967) |
| Total distributions | (44,172,637) | (1,001,012,967) |
| Share transactions | ||
| Proceeds from sales of shares | 982,508,524 | 2,350,566,255 |
| Reinvestment of distributions | 41,828,930 | 951,495,392 |
| Cost of shares redeemed | (2,807,128,925) | (3,240,646,680) |
| Net increase (decrease) in net assets resulting from share transactions | (1,782,791,471) | 61,414,967 |
| Redemption fees | 59,517 | 273,990 |
| Total increase (decrease) in net assets | (810,203,446) | (2,392,722,857) |
| Net Assets | ||
| Beginning of period | 7,439,085,104 | 9,831,807,961 |
| End of period | $6,628,881,658 | $7,439,085,104 |
| Other Information | ||
| Accumulated net investment loss end of period | $(353,910) | $(209,016) |
| Shares | ||
| Sold | 5,048,731 | 10,253,270 |
| Issued in reinvestment of distributions | 224,110 | 4,381,950 |
| Redeemed | (14,749,861) | (15,011,754) |
| Net increase (decrease) | (9,477,020) | (376,534) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Health Care Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $180.53 | $236.43 | $216.88 | $144.20 | $133.07 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .23 | (.07) | (.38) | (.20) | .50 |
| Net realized and unrealized gain (loss) | 29.29 | (31.64) | 50.00 | 92.44 | 24.74 |
| Total from investment operations | 29.52 | (31.71) | 49.62 | 92.24 | 25.24 |
| Distributions from net investment income | (.23) | – | – | (.03) | (.44) |
| Distributions from net realized gain | (.90) | (24.20) | (30.08) | (19.53) | (13.67) |
| Total distributions | (1.14)C | (24.20) | (30.08) | (19.57)D | (14.11) |
| Redemption fees added to paid in capitalB | –E | .01 | .01 | .01 | –E |
| Net asset value, end of period | $208.91 | $180.53 | $236.43 | $216.88 | $144.20 |
| Total ReturnF | 16.43% | (14.90)% | 25.44% | 67.13% | 20.07% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .74% | .73% | .74% | .77% | .79% |
| Expenses net of fee waivers, if any | .73% | .73% | .74% | .77% | .79% |
| Expenses net of all reductions | .73% | .72% | .74% | .76% | .78% |
| Net investment income (loss) | .12% | (.03)% | (.18)% | (.11)% | .36% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $6,628,882 | $7,439,085 | $9,831,808 | $6,180,280 | $2,724,341 |
| Portfolio turnover rateI | 49%J | 76% | 98%J | 99% | 95% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $1.14 per share is comprised of distributions from net investment income of $.234 and distributions from net realized gain of $.904 per share.
D Total distributions of $19.57 per share is comprised of distributions from net investment income of $.034 and distributions from net realized gain of $19.532 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Health Care Services Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Health Care Services Portfolio | 19.71% | 14.53% | 9.96% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Health Care Services Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $25,852 | Health Care Services Portfolio | |
| $20,834 | S&P 500® Index | |
Health Care Services Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union –recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Co-Portfolio Manager Justin Segalini: For the year, the fund gained 19.71%, outperforming the 18.88% result of the MSCI U.S. IMI Health Care Providers & Services 25/50 Index, but lagging the S&P 500®. Uncertainty stemming from the U.S. presidential election cycle in 2016 led to above-average volatility for health care services stocks the past 12 months. As a result, the industry underperformed the broader market. Versus the MSCI industry index, choices among health care facilities proved beneficial, as did an overweight and stock selection in managed care. An underweight in health care distributors was another plus. An underweighting in Express Scripts, a large pharmacy benefits manager (PBM), was the fund’s biggest relative contributor, as the stock returned -88% for year. Questions over the company’s drug-pricing practices continued to weigh on its stock. Early in the period, Express Scripts was sued by health insurance giant Anthem over higher drug prices. Then, in August, shares dropped as investors feared backlash over a surge in Mylan’s EpiPen prices would influence PBMs. Elsewhere, an overweighting in UnitedHealth Group, the largest benchmark constituent, also contributed. United shares rose 22% the past year, as the firm expanded market leadership across all business lines, driving above average growth for the company. Our stake in Surgical Care Affiliates, one of the largest providers of outpatient surgeries in the country, was another plus. We sold our stake in Surgical Care before period end to lock in profits. Conversely, the fund’s largest relative detractor was Adeptus Health. Adeptus operates free-standing emergency rooms throughout Texas and Colorado. Adeptus shares sold off after the company released disappointing second-quarter results, then dropped again following news that its longtime CEO would leave the firm. In November, the company delayed its third-quarter earnings release, concerning investors, and the stock plunged. We sold our stake in Adeptus by period end. Not owning index component Tivity (formerly known as HealthWays) also hurt. The firm offers employers, health plans and health systems a variety of wellness programs and prevention solutions. The stock soared in late July when the firm unexpectedly sold its healthy-living business – a money-losing unit – to Sharecare, an online health and wellness platform.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Health Care Services Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| UnitedHealth Group, Inc. | 25.0 | 22.9 |
| Anthem, Inc. | 8.6 | 5.4 |
| Humana, Inc. | 6.9 | 5.0 |
| Cigna Corp. | 6.6 | 6.2 |
| HCA Holdings, Inc. | 5.0 | 4.9 |
| Aetna, Inc. | 4.9 | 4.9 |
| McKesson Corp. | 4.6 | 8.2 |
| Universal Health Services, Inc. Class B | 4.3 | 3.6 |
| Envision Healthcare Corp. | 4.0 | 1.2 |
| Express Scripts Holding Co. | 3.8 | 5.0 |
| 73.7 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Health Care Providers & Services | 97.4% | |
| Professional Services | 0.9% | |
| Pharmaceuticals | 0.5% | |
| Equity Real Estate Investment Trusts (Reits) | 0.3% | |
| All Others* | 0.9% | |
| As of August 31, 2016 | ||
| Health Care Providers & Services | 97.9% | |
| Pharmaceuticals | 1.0% | |
| Professional Services | 1.0% | |
| All Others* | 0.1% | |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
* Includes short-term investments and net other assets (liabilities).
Health Care Services Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 99.1% | |||
| Shares | Value | ||
| Equity Real Estate Investment Trusts (REITs) - 0.3% | |||
| Health Care REITs - 0.3% | |||
| Medical Properties Trust, Inc. | 164,500 | $2,207,590 | |
| Health Care Providers & Services - 97.4% | |||
| Health Care Distributors & Services - 8.2% | |||
| AmerisourceBergen Corp. | 58,500 | 5,353,335 | |
| Cardinal Health, Inc. | 235,600 | 19,170,772 | |
| Henry Schein, Inc. (a) | 16,500 | 2,830,740 | |
| McKesson Corp. | 234,600 | 35,220,498 | |
| 62,575,345 | |||
| Health Care Facilities - 14.4% | |||
| Acadia Healthcare Co., Inc. (a)(b) | 342,700 | 15,325,544 | |
| Brookdale Senior Living, Inc. (a) | 436,400 | 6,284,160 | |
| HCA Holdings, Inc. (a) | 436,400 | 38,071,536 | |
| HealthSouth Corp. | 228,000 | 9,648,960 | |
| U.S. Physical Therapy, Inc. | 100,000 | 7,565,000 | |
| Universal Health Services, Inc. Class B | 256,700 | 32,241,520 | |
| 109,136,720 | |||
| Health Care Services - 21.9% | |||
| Almost Family, Inc. (a) | 109,800 | 5,451,570 | |
| American Renal Associates Holdings, Inc. (b) | 387,221 | 8,751,195 | |
| Chemed Corp. | 20,000 | 3,571,000 | |
| DaVita HealthCare Partners, Inc. (a) | 197,300 | 13,694,593 | |
| Envision Healthcare Corp. (a) | 437,500 | 30,625,000 | |
| Express Scripts Holding Co. (a) | 407,900 | 28,818,135 | |
| Laboratory Corp. of America Holdings (a) | 201,500 | 28,665,390 | |
| MEDNAX, Inc. (a) | 212,300 | 15,113,637 | |
| Premier, Inc. (a) | 319,200 | 10,032,456 | |
| Providence Service Corp. (a) | 105,000 | 4,265,100 | |
| Quest Diagnostics, Inc. | 103,800 | 10,114,272 | |
| Teladoc, Inc. (a)(b) | 329,000 | 7,254,450 | |
| 166,356,798 | |||
| Managed Health Care - 52.9% | |||
| Aetna, Inc. | 287,700 | 37,044,252 | |
| Anthem, Inc. | 396,202 | 65,302,014 | |
| Centene Corp. (a) | 101,000 | 7,120,500 | |
| Cigna Corp. | 337,100 | 50,194,190 | |
| Humana, Inc. | 249,900 | 52,791,375 | |
| UnitedHealth Group, Inc. | 1,148,100 | 189,872,777 | |
| 402,325,108 | |||
| TOTAL HEALTH CARE PROVIDERS & SERVICES | 740,393,971 | ||
| Pharmaceuticals - 0.5% | |||
| Pharmaceuticals - 0.5% | |||
| Catalent, Inc. (a) | 127,300 | 3,653,510 | |
| Professional Services - 0.9% | |||
| Human Resource & Employment Services - 0.9% | |||
| WageWorks, Inc. (a) | 92,100 | 7,091,700 | |
| TOTAL COMMON STOCKS | |||
| (Cost $417,730,213) | 753,346,771 | ||
| Money Market Funds - 3.6% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 4,863,230 | 4,864,203 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 22,553,167 | 22,557,678 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $27,419,711) | 27,421,881 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.7% | |||
| (Cost $445,149,924) | 780,768,652 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.7)% | (20,660,977) | ||
| NET ASSETS - 100% | $760,107,675 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $17,630 |
| Fidelity Securities Lending Cash Central Fund | 460,092 |
| Total | $477,722 |
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Health Care Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $21,975,503) — See accompanying schedule: Unaffiliated issuers (cost $417,730,213) | $753,346,771 | |
| Fidelity Central Funds (cost $27,419,711) | 27,421,881 | |
| Total Investments (cost $445,149,924) | $780,768,652 | |
| Receivable for investments sold | 3,815,799 | |
| Receivable for fund shares sold | 896,372 | |
| Dividends receivable | 122,206 | |
| Distributions receivable from Fidelity Central Funds | 20,754 | |
| Prepaid expenses | 3,311 | |
| Other receivables | 39,360 | |
| Total assets | 785,666,454 | |
| Liabilities | ||
| Payable for investments purchased | $1,570,363 | |
| Payable for fund shares redeemed | 894,271 | |
| Accrued management fee | 338,159 | |
| Other affiliated payables | 131,250 | |
| Other payables and accrued expenses | 69,561 | |
| Collateral on securities loaned | 22,555,175 | |
| Total liabilities | 25,558,779 | |
| Net Assets | $760,107,675 | |
| Net Assets consist of: | ||
| Paid in capital | $391,219,273 | |
| Accumulated net investment loss | (437,618) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 33,708,947 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 335,617,073 | |
| Net Assets, for 8,452,113 shares outstanding | $760,107,675 | |
| Net Asset Value, offering price and redemption price per share ($760,107,675 ÷ 8,452,113 shares) | $89.93 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $7,017,310 | |
| Income from Fidelity Central Funds (including $460,092 from security lending) | 477,722 | |
| Total income | 7,495,032 | |
| Expenses | ||
| Management fee | $4,437,093 | |
| Transfer agent fees | 1,447,800 | |
| Accounting and security lending fees | 282,436 | |
| Custodian fees and expenses | 15,802 | |
| Independent trustees' fees and expenses | 18,016 | |
| Registration fees | 38,307 | |
| Audit | 41,261 | |
| Legal | 14,842 | |
| Interest | 1,889 | |
| Miscellaneous | 12,079 | |
| Total expenses before reductions | 6,309,525 | |
| Expense reductions | (14,890) | 6,294,635 |
| Net investment income (loss) | 1,200,397 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 67,672,972 | |
| Fidelity Central Funds | (267) | |
| Foreign currency transactions | 1,903 | |
| Total net realized gain (loss) | 67,674,608 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 71,121,687 | |
| Assets and liabilities in foreign currencies | (230) | |
| Total change in net unrealized appreciation (depreciation) | 71,121,457 | |
| Net gain (loss) | 138,796,065 | |
| Net increase (decrease) in net assets resulting from operations | $139,996,462 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $1,200,397 | $(325,516) |
| Net realized gain (loss) | 67,674,608 | 32,972,196 |
| Change in net unrealized appreciation (depreciation) | 71,121,457 | (99,109,996) |
| Net increase (decrease) in net assets resulting from operations | 139,996,462 | (66,463,316) |
| Distributions to shareholders from net investment income | (1,101,426) | (196,725) |
| Distributions to shareholders from net realized gain | (32,459,112) | (36,264,193) |
| Total distributions | (33,560,538) | (36,460,918) |
| Share transactions | ||
| Proceeds from sales of shares | 98,741,730 | 418,304,133 |
| Reinvestment of distributions | 31,971,028 | 35,019,570 |
| Cost of shares redeemed | (314,570,674) | (391,343,866) |
| Net increase (decrease) in net assets resulting from share transactions | (183,857,916) | 61,979,837 |
| Redemption fees | 11,242 | 46,721 |
| Total increase (decrease) in net assets | (77,410,750) | (40,897,676) |
| Net Assets | ||
| Beginning of period | 837,518,425 | 878,416,101 |
| End of period | $760,107,675 | $837,518,425 |
| Other Information | ||
| Accumulated net investment loss end of period | $(437,618) | $(538,491) |
| Shares | ||
| Sold | 1,169,971 | 4,736,725 |
| Issued in reinvestment of distributions | 384,552 | 408,409 |
| Redeemed | (3,759,703) | (4,554,229) |
| Net increase (decrease) | (2,205,180) | 590,905 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Health Care Services Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $78.59 | $87.26 | $75.55 | $59.90 | $61.26 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .12 | (.03) | (.09) | (.07) | .06 |
| Net realized and unrealized gain (loss) | 15.03 | (5.21) | 19.25 | 20.08 | 1.77 |
| Total from investment operations | 15.15 | (5.24) | 19.16 | 20.01 | 1.83 |
| Distributions from net investment income | (.13) | (.02) | – | – | (.03) |
| Distributions from net realized gain | (3.68) | (3.41) | (7.45) | (4.36) | (3.16) |
| Total distributions | (3.81) | (3.43) | (7.45) | (4.36) | (3.19) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $89.93 | $78.59 | $87.26 | $75.55 | $59.90 |
| Total ReturnD | 19.71% | (6.30)% | 26.88% | 34.22% | 3.17% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .78% | .77% | .79% | .82% | .84% |
| Expenses net of fee waivers, if any | .78% | .77% | .79% | .82% | .84% |
| Expenses net of all reductions | .78% | .77% | .79% | .82% | .83% |
| Net investment income (loss) | .15% | (.03)% | (.12)% | (.10)% | .10% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $760,108 | $837,518 | $878,416 | $692,486 | $562,949 |
| Portfolio turnover rateG | 26% | 39% | 44% | 65% | 96% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Medical Equipment and Systems Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Medical Equipment and Systems Portfolio | 30.13% | 19.54% | 13.16% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Medical Equipment and Systems Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $34,436 | Medical Equipment and Systems Portfolio | |
| $20,834 | S&P 500® Index | |
Medical Equipment and Systems Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union –recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Eddie Yoon: For the year, the fund gained 30.13%, outpacing the 25.20% result of the MSCI U.S. IMI Health Care Equipment & Supplies 25/50 Index and the broader S&P 500® index. Medical equipment stocks benefited from solid fundamentals, largely driven by strong employment and health care utilization trends. Versus the MSCI index, stock selection in health care equipment, the funds primary area of investment, aided performance most. The fund’s top relative contributor was medical device maker Boston Scientific, whose shares rose roughly 45% on better-than-expected earnings and higher annual revenue targets. Timely positioning in Zeltiq Aesthetics was another significant contributor. Zeltiq shares surged higher in February in advance of the announcement that Botox maker Allergan, another fund holding and detractor this period, intends to buy the company at a premium. The deal was not completed by February 28, and we sold our stake in Zeltiq after the news broke. Picks among health care supplies stocks also helped, including an overweighting in Spectranetics, which makes drug-coated balloons used to treat femoral artery disease. Conversely, not owning Idexx Laboratories, a leading provider of veterinary testing, was the fund’s largest relative detractor as the company’s growth exceeded expectations this period. An out-of-index position in Israel-based Teva Pharmaceutical Industries also hurt. Our position in Teva returned -27%, as significant concern over the generic-drug pricing environment and the durability of its key multiple sclerosis drug, Copaxone®,, pressured the stock price. We sold the fund’s position in Teva by period end.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Medical Equipment and Systems Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Medtronic PLC | 21.2 | 20.8 |
| Boston Scientific Corp. | 11.2 | 9.6 |
| Intuitive Surgical, Inc. | 6.8 | 7.0 |
| Stryker Corp. | 4.1 | 3.0 |
| Danaher Corp. | 3.8 | 3.5 |
| Abbott Laboratories | 2.9 | 2.0 |
| DexCom, Inc. | 2.7 | 2.7 |
| The Cooper Companies, Inc. | 2.7 | 2.5 |
| Zimmer Biomet Holdings, Inc. | 2.6 | 5.5 |
| Wright Medical Group NV | 2.6 | 2.0 |
| 60.6 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Health Care Equipment & Supplies | 80.2% | |
| Biotechnology | 5.9% | |
| Pharmaceuticals | 3.0% | |
| Health Care Providers & Services | 2.9% | |
| Health Care Technology | 2.4% | |
| All Others* | 5.6% | |
| As of August 31, 2016 | ||
| Health Care Equipment & Supplies | 87.1% | |
| Pharmaceuticals | 5.3% | |
| Biotechnology | 2.0% | |
| Life Sciences Tools & Services | 1.6% | |
| Health Care Technology | 1.6% | |
| All Others* | 2.4% | |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
* Includes short-term investments and net other assets (liabilities).
Medical Equipment and Systems Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 96.4% | |||
| Shares | Value | ||
| Biotechnology - 5.9% | |||
| Biotechnology - 5.9% | |||
| Alexion Pharmaceuticals, Inc. (a) | 400,000 | $52,500,000 | |
| Amgen, Inc. | 440,000 | 77,673,200 | |
| Puma Biotechnology, Inc. (a) | 250,200 | 9,182,340 | |
| Vertex Pharmaceuticals, Inc. (a) | 501,619 | 45,456,714 | |
| 184,812,254 | |||
| Health Care Equipment & Supplies - 79.2% | |||
| Health Care Equipment - 74.2% | |||
| Abbott Laboratories | 2,000,000 | 90,160,000 | |
| Angiodynamics, Inc. (a) | 880,000 | 14,388,000 | |
| Atricure, Inc. (a) | 1,500,000 | 27,375,000 | |
| Avinger, Inc. (a)(b)(c) | 1,400,000 | 3,570,000 | |
| Becton, Dickinson & Co. | 55,000 | 10,067,750 | |
| Boston Scientific Corp. (a) | 14,300,000 | 351,065,000 | |
| C.R. Bard, Inc. | 228,000 | 55,914,720 | |
| Danaher Corp. | 1,400,000 | 119,770,000 | |
| DexCom, Inc. (a) | 1,090,000 | 85,194,400 | |
| Edwards Lifesciences Corp. (a) | 360,000 | 33,854,400 | |
| Genmark Diagnostics, Inc. (a) | 1,800,000 | 20,376,000 | |
| Inogen, Inc. (a) | 164,000 | 11,253,680 | |
| Insulet Corp. (a) | 1,188,000 | 51,749,280 | |
| Integra LifeSciences Holdings Corp. (a)(b) | 1,200,000 | 51,288,000 | |
| Intuitive Surgical, Inc. (a) | 288,000 | 212,256,000 | |
| iRhythm Technologies, Inc. (b) | 280,000 | 10,785,600 | |
| LivaNova PLC (a) | 111,251 | 5,607,050 | |
| Masimo Corp. (a) | 380,000 | 34,336,800 | |
| Medtronic PLC | 8,220,000 | 665,080,200 | |
| Nakanishi, Inc. | 330,000 | 13,144,777 | |
| Nevro Corp. (a)(b) | 185,000 | 17,758,150 | |
| NxStage Medical, Inc. (a) | 1,280,000 | 36,556,800 | |
| Penumbra, Inc. (a)(b) | 400,000 | 30,720,000 | |
| ResMed, Inc. | 400,000 | 28,812,000 | |
| Steris PLC | 500,000 | 35,065,000 | |
| Stryker Corp. | 1,000,000 | 128,560,000 | |
| Teleflex, Inc. | 100,000 | 19,118,000 | |
| Wright Medical Group NV (a) | 2,880,000 | 80,294,400 | |
| Zimmer Biomet Holdings, Inc. | 700,000 | 81,956,000 | |
| 2,326,077,007 | |||
| Health Care Supplies - 5.0% | |||
| Alere, Inc. (a) | 200,000 | 7,660,000 | |
| Sartorius Stedim Biotech | 114,181 | 7,278,365 | |
| The Cooper Companies, Inc. | 418,800 | 83,399,832 | |
| The Spectranetics Corp. (a) | 2,040,000 | 56,763,000 | |
| 155,101,197 | |||
| TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 2,481,178,204 | ||
| Health Care Providers & Services - 2.8% | |||
| Health Care Services - 1.7% | |||
| Miraca Holdings, Inc. | 280,000 | 13,408,696 | |
| Premier, Inc. (a) | 500,000 | 15,715,000 | |
| Teladoc, Inc. (a)(b) | 1,100,000 | 24,255,000 | |
| 53,378,696 | |||
| Managed Health Care - 1.1% | |||
| Humana, Inc. | 160,000 | 33,800,000 | |
| TOTAL HEALTH CARE PROVIDERS & SERVICES | 87,178,696 | ||
| Health Care Technology - 2.4% | |||
| Health Care Technology - 2.4% | |||
| athenahealth, Inc. (a) | 157,634 | 18,589,778 | |
| Castlight Health, Inc. (a) | 999,300 | 3,547,515 | |
| Castlight Health, Inc. Class B (a)(b) | 750,000 | 2,662,500 | |
| Cerner Corp. (a) | 51,955 | 2,859,603 | |
| Evolent Health, Inc. (a)(b) | 500,000 | 9,850,000 | |
| HealthStream, Inc. (a) | 522,882 | 12,794,923 | |
| HTG Molecular Diagnostics (a)(b)(c) | 673,461 | 1,838,549 | |
| Medidata Solutions, Inc. (a) | 400,000 | 22,368,000 | |
| 74,510,868 | |||
| Internet Software & Services - 0.4% | |||
| Internet Software & Services - 0.4% | |||
| Benefitfocus, Inc. (a)(b) | 510,000 | 13,540,500 | |
| Life Sciences Tools & Services - 2.1% | |||
| Life Sciences Tools & Services - 2.1% | |||
| Agilent Technologies, Inc. | 840,000 | 43,092,000 | |
| Bruker Corp. | 1,000,000 | 24,150,000 | |
| 67,242,000 | |||
| Pharmaceuticals - 3.0% | |||
| Pharmaceuticals - 3.0% | |||
| Allergan PLC | 260,000 | 63,653,200 | |
| Catalent, Inc. (a) | 1,000,000 | 28,700,000 | |
| 92,353,200 | |||
| Professional Services - 0.6% | |||
| Human Resource & Employment Services - 0.6% | |||
| WageWorks, Inc. (a) | 260,000 | 20,020,000 | |
| TOTAL COMMON STOCKS | |||
| (Cost $2,306,307,003) | 3,020,835,722 | ||
| Preferred Stocks - 1.4% | |||
| Convertible Preferred Stocks - 0.4% | |||
| Health Care Providers & Services - 0.1% | |||
| Health Care Services - 0.1% | |||
| 1Life Healthcare, Inc. Series G (a)(d) | 455,526 | 3,011,027 | |
| Software - 0.3% | |||
| Application Software - 0.3% | |||
| Outset Medical, Inc. Series B (a)(d) | 3,307,754 | 8,572,044 | |
| TOTAL CONVERTIBLE PREFERRED STOCKS | 11,583,071 | ||
| Nonconvertible Preferred Stocks - 1.0% | |||
| Health Care Equipment & Supplies - 1.0% | |||
| Health Care Equipment - 1.0% | |||
| Sartorius AG (non-vtg.) | 440,000 | 33,021,074 | |
| TOTAL PREFERRED STOCKS | |||
| (Cost $29,116,255) | 44,604,145 | ||
| Money Market Funds - 5.1% | |||
| Fidelity Cash Central Fund, 0.60% (e) | 83,866,143 | 83,882,917 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (e)(f) | 75,662,029 | 75,677,162 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $159,546,449) | 159,560,079 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.9% | |||
| (Cost $2,494,969,707) | 3,224,999,946 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.9)% | (90,623,836) | ||
| NET ASSETS - 100% | $3,134,376,110 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated company
(d) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $11,583,071 or 0.4% of net assets.
(e) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(f) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| 1Life Healthcare, Inc. Series G | 4/10/14 | $3,000,003 |
| Outset Medical, Inc. Series B | 5/5/15 - 6/5/15 | $7,500,001 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $84,820 |
| Fidelity Securities Lending Cash Central Fund | 1,313,614 |
| Total | $1,398,434 |
Other Affiliated Issuers
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:
| Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, end of period |
| Atricure, Inc. | $19,055,500 | $8,199,827 | $3,467,371 | $-- | $-- |
| Avinger, Inc. | -- | 6,643,350 | -- | -- | 3,570,000 |
| HTG Molecular Diagnostics | 1,939,568 | -- | -- | -- | 1,838,549 |
| Neovasc, Inc. | 9,663,573 | 1,343,442 | 6,397,220 | -- | -- |
| Total | $30,658,641 | $16,186,619 | $9,864,591 | $-- | $5,408,549 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $3,020,835,722 | $3,020,835,722 | $-- | $-- |
| Preferred Stocks | 44,604,145 | 33,021,074 | -- | 11,583,071 |
| Money Market Funds | 159,560,079 | 159,560,079 | -- | -- |
| Total Investments in Securities: | $3,224,999,946 | $3,213,416,875 | $-- | $11,583,071 |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 70.8% |
| Ireland | 23.3% |
| Netherlands | 2.6% |
| United Kingdom | 1.3% |
| Germany | 1.0% |
| Others (Individually Less Than 1%) | 1.0% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Medical Equipment and Systems Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $72,889,605) — See accompanying schedule: Unaffiliated issuers (cost $2,319,351,454) | $3,060,031,318 | |
| Fidelity Central Funds (cost $159,546,449) | 159,560,079 | |
| Other affiliated issuers (cost $16,071,804) | 5,408,549 | |
| Total Investments (cost $2,494,969,707) | $3,224,999,946 | |
| Receivable for investments sold | 10,229,339 | |
| Receivable for fund shares sold | 15,867,083 | |
| Dividends receivable | 998,908 | |
| Distributions receivable from Fidelity Central Funds | 78,969 | |
| Prepaid expenses | 9,628 | |
| Other receivables | 94,052 | |
| Total assets | 3,252,277,925 | |
| Liabilities | ||
| Payable for investments purchased | $34,211,816 | |
| Payable for fund shares redeemed | 6,052,740 | |
| Accrued management fee | 1,366,733 | |
| Other affiliated payables | 480,510 | |
| Other payables and accrued expenses | 131,741 | |
| Collateral on securities loaned | 75,658,275 | |
| Total liabilities | 117,901,815 | |
| Net Assets | $3,134,376,110 | |
| Net Assets consist of: | ||
| Paid in capital | $2,395,345,241 | |
| Distributions in excess of net investment income | (89,174) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 9,087,334 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 730,032,709 | |
| Net Assets, for 75,560,238 shares outstanding | $3,134,376,110 | |
| Net Asset Value, offering price and redemption price per share ($3,134,376,110 ÷ 75,560,238 shares) | $41.48 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $18,840,729 | |
| Income from Fidelity Central Funds (including $1,313,614 from security lending) | 1,398,434 | |
| Total income | 20,239,163 | |
| Expenses | ||
| Management fee | $14,375,940 | |
| Transfer agent fees | 4,433,681 | |
| Accounting and security lending fees | 795,927 | |
| Custodian fees and expenses | 49,620 | |
| Independent trustees' fees and expenses | 55,621 | |
| Registration fees | 158,570 | |
| Audit | 43,651 | |
| Legal | 33,995 | |
| Interest | 1,231 | |
| Miscellaneous | 31,314 | |
| Total expenses before reductions | 19,979,550 | |
| Expense reductions | (98,021) | 19,881,529 |
| Net investment income (loss) | 357,634 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 178,541,039 | |
| Fidelity Central Funds | 11,576 | |
| Other affiliated issuers | (9,949,732) | |
| Foreign currency transactions | 46,386 | |
| Total net realized gain (loss) | 168,649,269 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 424,006,632 | |
| Assets and liabilities in foreign currencies | 3,272 | |
| Total change in net unrealized appreciation (depreciation) | 424,009,904 | |
| Net gain (loss) | 592,659,173 | |
| Net increase (decrease) in net assets resulting from operations | $593,016,807 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $357,634 | $(1,814,462) |
| Net realized gain (loss) | 168,649,269 | 107,377,173 |
| Change in net unrealized appreciation (depreciation) | 424,009,904 | (244,045,411) |
| Net increase (decrease) in net assets resulting from operations | 593,016,807 | (138,482,700) |
| Distributions to shareholders from net investment income | – | (323,937) |
| Distributions to shareholders from net realized gain | (146,067,746) | (304,740,732) |
| Total distributions | (146,067,746) | (305,064,669) |
| Share transactions | ||
| Proceeds from sales of shares | 1,466,793,197 | 386,283,948 |
| Reinvestment of distributions | 140,204,873 | 288,871,521 |
| Cost of shares redeemed | (835,443,267) | (423,373,975) |
| Net increase (decrease) in net assets resulting from share transactions | 771,554,803 | 251,781,494 |
| Redemption fees | 100,741 | 22,443 |
| Total increase (decrease) in net assets | 1,218,604,605 | (191,743,432) |
| Net Assets | ||
| Beginning of period | 1,915,771,505 | 2,107,514,937 |
| End of period | $3,134,376,110 | $1,915,771,505 |
| Other Information | ||
| Distributions in excess of net investment income end of period | $(89,174) | $(2,859,853) |
| Shares | ||
| Sold | 36,297,550 | 10,257,167 |
| Issued in reinvestment of distributions | 3,801,155 | 7,601,549 |
| Redeemed | (21,308,013) | (11,391,991) |
| Net increase (decrease) | 18,790,692 | 6,466,725 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Medical Equipment and Systems Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $33.75 | $41.90 | $38.03 | $30.60 | $28.02 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .01 | (.03) | .04 | .01 | .04 |
| Net realized and unrealized gain (loss) | 9.87 | (2.25) | 9.86 | 10.94 | 3.77 |
| Total from investment operations | 9.88 | (2.28) | 9.90 | 10.95 | 3.81 |
| Distributions from net investment income | – | (.01) | (.05) | – | (.05) |
| Distributions from net realized gain | (2.15) | (5.86) | (5.98) | (3.52) | (1.18) |
| Total distributions | (2.15) | (5.87) | (6.03) | (3.52) | (1.23) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $41.48 | $33.75 | $41.90 | $38.03 | $30.60 |
| Total ReturnD | 30.13% | (6.63)% | 28.52% | 37.03% | 14.09% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .76% | .76% | .77% | .80% | .83% |
| Expenses net of fee waivers, if any | .76% | .76% | .77% | .80% | .83% |
| Expenses net of all reductions | .76% | .75% | .77% | .79% | .82% |
| Net investment income (loss) | .01% | (.09)% | .11% | .04% | .13% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $3,134,376 | $1,915,772 | $2,107,515 | $1,720,317 | $1,404,437 |
| Portfolio turnover rateG | 55% | 46% | 106% | 75% | 69% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Pharmaceuticals Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Pharmaceuticals Portfolio | 0.57% | 13.13% | 10.75% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Pharmaceuticals Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $27,769 | Pharmaceuticals Portfolio | |
| $20,834 | S&P 500® Index | |
Pharmaceuticals Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union –recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Asher Anolic: For the year, the fund gained 0.57%, lagging the 4.53% result of the S&P® Custom Pharmaceuticals Index and the broader S&P 500® index. Pharmaceuticals stocks lagged this period as concerns about drug pricing reached a fever pitch. Versus the industry, a sizable out-of-index stake in Teva Pharmaceutical Industries was the fund’s biggest individual detractor. Our stake returned roughly -36%, as Teva’s stock price and the firm’s financial results were hampered by significant concern about the pricing environment for generic drugs and the durability of the firm’s key multiple sclerosis drug, Copaxone®. In addition, investors thought that Teva had overpaid to acquire the Actavis Generics business from Allergan. An underweighting in pharma giant Merck was another sizable detractor. The stock rose about 35% the past year, as one of the firm's cancer drugs showed a particularly strong benefit in patients with metastatic non-small-cell lung cancer. Conversely, underweighting diabetes drug maker Novo-Nordisk bolstered relative performance most. The company cut its full-year profit estimate, and the stock fell further in October due to falling insulin prices. Not owning Canada-based index component Concordia International also lifted relative results, as the stock returned about -40% for the year.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to shareholders: On April 1, 2017, the fund’s industry benchmark will change from the S&P® Custom Pharmaceuticals Index to the MSCI North America IMI + ADR Custom Pharmaceuticals 25/50 Index. Due to new international benchmark guidelines, S&P® Dow Jones® Indices has decided to stop offering its brand on custom benchmarks, effective March 31, 2017. Fidelity believes that the new MSCI index will continue to provide shareholders with meaningful performance comparisons.Pharmaceuticals Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| GlaxoSmithKline PLC sponsored ADR | 8.0 | 8.3 |
| Sanofi SA sponsored ADR | 7.9 | 6.3 |
| Allergan PLC | 5.7 | 6.8 |
| Bristol-Myers Squibb Co. | 5.6 | 4.0 |
| Johnson & Johnson | 5.4 | 7.1 |
| Shire PLC sponsored ADR | 5.1 | 5.2 |
| AstraZeneca PLC sponsored ADR | 4.9 | 4.4 |
| Novartis AG sponsored ADR | 4.2 | 3.2 |
| Pfizer, Inc. | 4.1 | 4.1 |
| Merck & Co., Inc. | 3.9 | 3.4 |
| 54.8 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Pharmaceuticals | 76.8% | |
| Biotechnology | 15.1% | |
| Health Care Providers & Services | 2.8% | |
| Health Care Equipment & Supplies | 2.5% | |
| Life Sciences Tools & Services | 1.0% | |
| All Others* | 1.8% | |
| As of August 31, 2016 | ||
| Pharmaceuticals | 81.6% | |
| Biotechnology | 13.5% | |
| Health Care Providers & Services | 1.7% | |
| Household Products | 1.3% | |
| Life Sciences Tools & Services | 1.0% | |
| All Others* | 0.9% | |
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
* Includes short-term investments and net other assets (liabilities).
Pharmaceuticals Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 98.5% | |||
| Shares | Value | ||
| Biotechnology - 15.1% | |||
| Biotechnology - 15.1% | |||
| AbbVie, Inc. | 263,990 | $16,325,142 | |
| Ablynx NV (a)(b) | 276,600 | 3,444,568 | |
| AC Immune SA (b) | 130,900 | 1,628,396 | |
| Advanced Accelerator Applications SA sponsored ADR (a) | 80,600 | 3,057,964 | |
| Advaxis, Inc. (a) | 135,900 | 1,194,561 | |
| Alexion Pharmaceuticals, Inc. (a) | 76,686 | 10,065,038 | |
| Alnylam Pharmaceuticals, Inc. (a) | 38,500 | 1,988,140 | |
| Amgen, Inc. | 124,100 | 21,907,373 | |
| BeiGene Ltd. ADR (b) | 46,233 | 1,801,700 | |
| Bellicum Pharmaceuticals, Inc. (a)(b) | 128,000 | 1,578,240 | |
| Corvus Pharmaceuticals, Inc. | 119,400 | 1,716,972 | |
| Curis, Inc. (a) | 422,700 | 976,437 | |
| Cytokinetics, Inc. (a) | 167,700 | 1,777,620 | |
| Emergent BioSolutions, Inc. (a) | 80,400 | 2,522,952 | |
| Five Prime Therapeutics, Inc. (a) | 46,200 | 2,119,194 | |
| Incyte Corp. (a) | 28,900 | 3,846,590 | |
| Olivo Labs (a)(c) | 6,851 | 8,290 | |
| PeptiDream, Inc. (a)(b) | 45,800 | 2,172,896 | |
| Pfenex, Inc. (a) | 190,700 | 1,378,761 | |
| Repligen Corp. (a) | 148,800 | 4,688,688 | |
| Shire PLC sponsored ADR | 283,500 | 51,228,450 | |
| Spark Therapeutics, Inc. (a) | 8,250 | 526,185 | |
| Ultragenyx Pharmaceutical, Inc. (a) | 32,000 | 2,722,560 | |
| uniQure B.V. (a)(b) | 280,618 | 1,784,730 | |
| Vertex Pharmaceuticals, Inc. (a) | 73,600 | 6,669,632 | |
| Xencor, Inc. (a) | 146,268 | 3,634,760 | |
| 150,765,839 | |||
| Chemicals - 0.5% | |||
| Specialty Chemicals - 0.5% | |||
| Codexis, Inc. (a) | 1,271,559 | 5,213,392 | |
| Health Care Equipment & Supplies - 2.0% | |||
| Health Care Equipment - 1.8% | |||
| Becton, Dickinson & Co. | 19,400 | 3,551,170 | |
| Cantel Medical Corp. | 21,200 | 1,740,732 | |
| Danaher Corp. | 73,700 | 6,305,035 | |
| Inogen, Inc. (a) | 31,000 | 2,127,220 | |
| Insulet Corp. (a) | 105,100 | 4,578,156 | |
| 18,302,313 | |||
| Health Care Supplies - 0.2% | |||
| Anika Therapeutics, Inc. (a) | 46,500 | 2,175,735 | |
| TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 20,478,048 | ||
| Health Care Providers & Services - 2.8% | |||
| Health Care Distributors & Services - 0.3% | |||
| AmerisourceBergen Corp. | 33,200 | 3,038,132 | |
| Managed Health Care - 2.5% | |||
| Anthem, Inc. | 39,900 | 6,576,318 | |
| Cigna Corp. | 27,200 | 4,050,080 | |
| Humana, Inc. | 43,200 | 9,126,000 | |
| UnitedHealth Group, Inc. | 30,900 | 5,110,242 | |
| 24,862,640 | |||
| TOTAL HEALTH CARE PROVIDERS & SERVICES | 27,900,772 | ||
| Household Products - 0.3% | |||
| Household Products - 0.3% | |||
| Reckitt Benckiser Group PLC | 27,280 | 2,477,015 | |
| Life Sciences Tools & Services - 1.0% | |||
| Life Sciences Tools & Services - 1.0% | |||
| Agilent Technologies, Inc. | 195,500 | 10,029,150 | |
| Personal Products - 0.0% | |||
| Personal Products - 0.0% | |||
| MYOS Corp. (a) | 40,000 | 110,800 | |
| Pharmaceuticals - 76.8% | |||
| Pharmaceuticals - 76.8% | |||
| Aclaris Therapeutics, Inc. (a)(b) | 150,000 | 4,684,500 | |
| Aerie Pharmaceuticals, Inc. (a) | 120,500 | 5,705,675 | |
| Ajanta Pharma Ltd. | 84,989 | 2,187,551 | |
| Akorn, Inc. (a) | 560,300 | 11,659,843 | |
| Allergan PLC | 233,838 | 57,248,219 | |
| Amphastar Pharmaceuticals, Inc. (a) | 147,100 | 2,275,637 | |
| Astellas Pharma, Inc. | 73,600 | 991,417 | |
| AstraZeneca PLC sponsored ADR (b) | 1,686,300 | 49,341,138 | |
| Avexis, Inc. | 1,400 | 85,848 | |
| Bayer AG | 32,000 | 3,522,175 | |
| Bristol-Myers Squibb Co. | 991,710 | 56,239,874 | |
| Catalent, Inc. (a) | 274,600 | 7,881,020 | |
| Clearside Biomedical, Inc. | 155,600 | 1,221,460 | |
| DepoMed, Inc. (a) | 237,700 | 3,895,903 | |
| Dermira, Inc. (a) | 256,400 | 8,638,116 | |
| Eli Lilly & Co. | 217,900 | 18,044,299 | |
| Endo International PLC (a) | 503,100 | 6,867,315 | |
| GlaxoSmithKline PLC sponsored ADR (b) | 1,922,800 | 79,757,741 | |
| Horizon Pharma PLC (a) | 180,400 | 2,895,420 | |
| Impax Laboratories, Inc. (a) | 376,400 | 5,363,700 | |
| Intra-Cellular Therapies, Inc. (a)(b) | 92,400 | 1,205,820 | |
| Jazz Pharmaceuticals PLC (a) | 225,800 | 29,945,596 | |
| Jiangsu Hengrui Medicine Co. Ltd. (A Shares) | 1,286,966 | 9,442,717 | |
| Johnson & Johnson | 440,600 | 53,845,726 | |
| Lannett Co., Inc. (a)(b) | 364,600 | 8,021,200 | |
| Mallinckrodt PLC (a) | 372,500 | 19,526,450 | |
| Merck & Co., Inc. | 596,136 | 39,267,478 | |
| Mylan N.V. (a) | 490,900 | 20,544,165 | |
| Nektar Therapeutics (a) | 156,500 | 2,047,020 | |
| Novartis AG sponsored ADR | 544,198 | 42,539,958 | |
| Novo Nordisk A/S Series B sponsored ADR | 323,000 | 11,411,590 | |
| Pacira Pharmaceuticals, Inc. (a) | 22,500 | 983,250 | |
| Perrigo Co. PLC | 166,552 | 12,453,093 | |
| Pfizer, Inc. | 1,213,088 | 41,390,563 | |
| Prestige Brands Holdings, Inc. (a) | 243,900 | 13,809,618 | |
| Revance Therapeutics, Inc. (a)(b) | 211,900 | 4,449,900 | |
| Richter Gedeon PLC | 207,900 | 4,611,098 | |
| Sanofi SA sponsored ADR | 1,832,022 | 79,015,109 | |
| Supernus Pharmaceuticals, Inc. (a) | 112,600 | 2,893,820 | |
| Teva Pharmaceutical Industries Ltd. sponsored ADR | 186,789 | 6,541,351 | |
| The Medicines Company (a) | 177,255 | 9,291,707 | |
| TherapeuticsMD, Inc. (a)(b) | 1,335,300 | 8,385,684 | |
| Theravance Biopharma, Inc. (a)(b) | 328,392 | 10,055,363 | |
| Valeant Pharmaceuticals International, Inc. (Canada) (a) | 341,727 | 4,914,035 | |
| Zoetis, Inc. Class A | 68,400 | 3,646,404 | |
| 768,745,566 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $813,634,284) | 985,720,582 | ||
| Nonconvertible Preferred Stocks - 0.5% | |||
| Health Care Equipment & Supplies - 0.5% | |||
| Health Care Equipment - 0.5% | |||
| Sartorius AG (non-vtg.) | |||
| (Cost $5,675,798) | 77,200 | 5,793,698 | |
| Money Market Funds - 5.5% | |||
| Fidelity Cash Central Fund, 0.60% (d) | 2,044,645 | 2,045,054 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (d)(e) | 52,859,144 | 52,869,716 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $54,908,391) | 54,914,770 | ||
| TOTAL INVESTMENT PORTFOLIO - 104.5% | |||
| (Cost $874,218,473) | 1,046,429,050 | ||
| NET OTHER ASSETS (LIABILITIES) - (4.5)% | (45,491,860) | ||
| NET ASSETS - 100% | $1,000,937,190 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $8,290 or 0.0% of net assets.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(e) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $11,544 |
| Fidelity Securities Lending Cash Central Fund | 707,057 |
| Total | $718,601 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $985,720,582 | $978,721,685 | $6,990,607 | $8,290 |
| Nonconvertible Preferred Stocks | 5,793,698 | 5,793,698 | -- | -- |
| Money Market Funds | 54,914,770 | 54,914,770 | -- | -- |
| Total Investments in Securities: | $1,046,429,050 | $1,039,430,153 | $6,990,607 | $8,290 |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 47.3% |
| United Kingdom | 13.2% |
| Ireland | 12.9% |
| France | 8.2% |
| Bailiwick of Jersey | 5.1% |
| Switzerland | 4.4% |
| Netherlands | 2.3% |
| Cayman Islands | 1.2% |
| Denmark | 1.1% |
| Others (Individually Less Than 1%) | 4.3% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Pharmaceuticals Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $50,709,524) — See accompanying schedule: Unaffiliated issuers (cost $819,310,082) | $991,514,280 | |
| Fidelity Central Funds (cost $54,908,391) | 54,914,770 | |
| Total Investments (cost $874,218,473) | $1,046,429,050 | |
| Receivable for investments sold | 15,036,411 | |
| Receivable for fund shares sold | 1,252,659 | |
| Dividends receivable | 4,609,389 | |
| Distributions receivable from Fidelity Central Funds | 83,755 | |
| Prepaid expenses | 5,719 | |
| Other receivables | 78,424 | |
| Total assets | 1,067,495,407 | |
| Liabilities | ||
| Payable for investments purchased | $9,571,772 | |
| Payable for fund shares redeemed | 3,347,919 | |
| Accrued management fee | 452,353 | |
| Other affiliated payables | 210,508 | |
| Other payables and accrued expenses | 121,681 | |
| Collateral on securities loaned | 52,853,984 | |
| Total liabilities | 66,558,217 | |
| Net Assets | $1,000,937,190 | |
| Net Assets consist of: | ||
| Paid in capital | $927,300,859 | |
| Undistributed net investment income | 1,106,382 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (99,640,910) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 172,170,859 | |
| Net Assets, for 55,283,865 shares outstanding | $1,000,937,190 | |
| Net Asset Value, offering price and redemption price per share ($1,000,937,190 ÷ 55,283,865 shares) | $18.11 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $26,223,183 | |
| Income from Fidelity Central Funds (including $707,057 from security lending) | 718,601 | |
| Total income | 26,941,784 | |
| Expenses | ||
| Management fee | $7,513,733 | |
| Transfer agent fees | 2,767,234 | |
| Accounting and security lending fees | 451,226 | |
| Custodian fees and expenses | 80,011 | |
| Independent trustees' fees and expenses | 31,436 | |
| Registration fees | 38,800 | |
| Audit | 41,017 | |
| Legal | 27,812 | |
| Interest | 4,381 | |
| Miscellaneous | 23,405 | |
| Total expenses before reductions | 10,979,055 | |
| Expense reductions | (71,988) | 10,907,067 |
| Net investment income (loss) | 16,034,717 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (64,444,656) | |
| Fidelity Central Funds | 9,746 | |
| Foreign currency transactions | 46,007 | |
| Total net realized gain (loss) | (64,388,903) | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 57,684,392 | |
| Assets and liabilities in foreign currencies | (10,229) | |
| Total change in net unrealized appreciation (depreciation) | 57,674,163 | |
| Net gain (loss) | (6,714,740) | |
| Net increase (decrease) in net assets resulting from operations | $9,319,977 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $16,034,717 | $22,839,344 |
| Net realized gain (loss) | (64,388,903) | 114,359,104 |
| Change in net unrealized appreciation (depreciation) | 57,674,163 | (394,782,681) |
| Net increase (decrease) in net assets resulting from operations | 9,319,977 | (257,584,233) |
| Distributions to shareholders from net investment income | (11,379,757) | (15,478,004) |
| Distributions to shareholders from net realized gain | – | (216,777,060) |
| Total distributions | (11,379,757) | (232,255,064) |
| Share transactions | ||
| Proceeds from sales of shares | 159,355,203 | 846,431,853 |
| Reinvestment of distributions | 10,875,085 | 222,801,615 |
| Cost of shares redeemed | (860,669,026) | (778,963,083) |
| Net increase (decrease) in net assets resulting from share transactions | (690,438,738) | 290,270,385 |
| Redemption fees | 25,672 | 114,340 |
| Total increase (decrease) in net assets | (692,472,846) | (199,454,572) |
| Net Assets | ||
| Beginning of period | 1,693,410,036 | 1,892,864,608 |
| End of period | $1,000,937,190 | $1,693,410,036 |
| Other Information | ||
| Undistributed net investment income end of period | $1,106,382 | $– |
| Distributions in excess of net investment income end of period | $– | $(39,142) |
| Shares | ||
| Sold | 8,712,351 | 36,402,595 |
| Issued in reinvestment of distributions | 637,835 | 10,422,776 |
| Redeemed | (47,134,152) | (35,766,896) |
| Net increase (decrease) | (37,783,966) | 11,058,475 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Pharmaceuticals Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $18.20 | $23.08 | $21.39 | $16.13 | $14.11 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .22 | .24 | .14 | .26 | .23 |
| Net realized and unrealized gain (loss) | (.13) | (2.52) | 3.76 | 6.96 | 2.26 |
| Total from investment operations | .09 | (2.28) | 3.90 | 7.22 | 2.49 |
| Distributions from net investment income | (.18) | (.17) | (.18) | (.18) | (.20) |
| Distributions from net realized gain | – | (2.43) | (2.03) | (1.77) | (.27) |
| Total distributions | (.18) | (2.60) | (2.21) | (1.96)C | (.47) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $18.11 | $18.20 | $23.08 | $21.39 | $16.13 |
| Total ReturnE | .57% | (11.33)% | 20.04% | 46.77% | 17.93% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .80% | .78% | .79% | .82% | .85% |
| Expenses net of fee waivers, if any | .80% | .78% | .79% | .81% | .85% |
| Expenses net of all reductions | .79% | .77% | .79% | .81% | .84% |
| Net investment income (loss) | 1.16% | 1.09% | .66% | 1.39% | 1.54% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,000,937 | $1,693,410 | $1,892,865 | $1,634,743 | $911,064 |
| Portfolio turnover rateH | 77% | 77% | 72%I | 95% | 54% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $1.96 per share is comprised of distributions from net investment income of $.182 and distributions from net realized gain of $1.773 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2017
1. Organization.
Biotechnology Portfolio, Health Care Portfolio, Health Care Services Portfolio, Medical Equipment and Systems Portfolio, and Pharmaceuticals Portfolio (the Funds) are non-diversified funds of Fidelity Select Portfolios (the Trust). The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Share transactions on the Statement of Changes in Net Assets may contain exchanges between affiliated funds.
2. Investments in Fidelity Central Funds.
The Funds invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but do not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of each Fund's investments to the Fair Value Committee (the Committee) established by each Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, each Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees each Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing each Fund's investments and ratifies the fair value determinations of the Committee.
Each Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy. Equity securities, including restricted securities, for which observable inputs are not available are valued using alternate valuation approaches, including the market approach and the income approach and are categorized as Level 3 in the hierarchy. The market approach generally consists of using comparable market transactions while the income approach generally consists of using the net present value of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors.
Investments in open-end mutual funds, including Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
The following provides information on Level 3 securities held by Biotechnology Portfolio that were valued at period end based on unobservable inputs. These amounts exclude valuations provided by a broker.
| Asset Type | Fair Value | Valuation Technique(s) | Unobservable Input | Amount or Range/Weighted Average | Impact to Valuation from an Increase in Input(a) |
| Equities | $ 246,800,459 | Discounted cash flow | Discount rate | 8.0% - 14.4% / 11.4% | Decrease |
| Discount for lack of marketability | 10.0% | Decrease | |||
| Probability rate | 6.3% - 68.9% / 8.7% | Increase | |||
| Market approach | Discount rate | 16.0% - 25.0% / 20.5% | Decrease | ||
| Transaction price | $1.98 - $150.00/ $26.67 | Increase | |||
| Premium rate | 4.0% - 15.0% / 10.4% | Increase | |||
| Discount for lack of marketability | 10.0% | Decrease | |||
| Proxy discount | 12.0% - 18.5% / 15.2% | Decrease | |||
| Probability rate | 77.0% | Increase | |||
| Proxy premium | 21.3% - 21.8% / 21.5% | Increase | |||
| Projected royalty | 3.5% | Increase | |||
| Market comparable | Enterprise value/Sales multiple (EV/S) | 2.4 - 3.1 / 2.7 | Increase | ||
| Recovery value | Recovery value | 0.0% | Increase |
(a) Represents the expected directional change in the fair value of the Level 3 investments that would result from an increase in the corresponding input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs could result in significantly higher or lower fair value measurements.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 28, 2017,including information on transfers between Levels 1 and 2, as well as a roll forward of Level 3 investments, is included at the end of each applicable Fund's Schedule of Investments.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Funds represent a return of capital or capital gain. The Funds determine the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Interest income is accrued as earned and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for the Funds, independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2017, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. Each Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, the Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), redemptions in kind, partnerships, deferred trustees compensation, net operating losses, capital loss carryforwards, losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) on securities | |
| Biotechnology Portfolio | $8,407,591,962 | $3,398,375,809 | $(1,023,770,843) | $2,374,604,966 |
| Health Care Portfolio | 5,420,500,053 | 1,562,595,387 | (216,384,640) | 1,346,210,747 |
| Health Care Services Portfolio | 448,185,159 | 338,901,165 | (6,317,672) | 332,583,493 |
| Medical Equipment and Systems Portfolio | 2,501,220,236 | 776,082,604 | (52,302,894) | 723,779,710 |
| Pharmaceuticals Portfolio | 881,127,150 | 197,376,576 | (32,074,676) | 165,301,900 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed ordinary income | Undistributed long-term capital gain | Capital loss carryforward | Net unrealized appreciation (depreciation) on securities and other investments | |
| Biotechnology Portfolio | $– | $– | $(165,997,617) | $2,374,618,672 |
| Health Care Portfolio | – | – | (113,174,584) | 1,346,197,365 |
| Health Care Services Portfolio | – | 36,744,180 | – | 332,581,838 |
| Medical Equipment and Systems Portfolio | – | 15,337,862 | – | 723,782,180 |
| Pharmaceuticals Portfolio | 1,172,117 | – | (92,732,233) | 165,266,782 |
Capital loss carryforwards are only available to offset future capital gains of the Funds to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| No expiration | ||||
| Short-term | Long-term | Total no expiration | Total capital loss carryfoward | |
| Biotechnology Portfolio | $(165,997,617) | $-– | $(165,997,617) | $(165,997,617) |
| Health Care Portfolio | (113,174,584) | -– | (113,174,584) | (113,174,584) |
| Pharmaceuticals Portfolio | (90,254,422) | (2,477,811) | (92,732,233) | (92,732,233) |
Certain of the Funds intend to elect to defer to the next fiscal year ordinary losses recognized during the period January 1, 2017 to February 28, 2017. Loss deferrals were as follows:
| Biotechnology Portfolio | $2,936,860 |
| Health Care Services Portfolio | 401,429 |
The tax character of distributions paid was as follows:
| February 28, 2017 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Biotechnology Portfolio | $– | $351,244,588 | $351,244,588 |
| Health Care Portfolio | 7,826,452 | 36,346,185 | 44,172,637 |
| Health Care Services Portfolio | 1,101,426 | 32,459,112 | 33,560,538 |
| Medical Equipment and Systems Portfolio | 29,295,276 | 116,772,470 | 146,067,746 |
| Pharmaceuticals Portfolio | 11,379,757 | – | 11,379,757 |
| February 29, 2016 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Biotechnology Portfolio | $– | $935,222,849 | $935,222,849 |
| Health Care Portfolio | 320,022,051 | 680,990,916 | 1,001,012,967 |
| Health Care Services Portfolio | 5,714,562 | 30,746,356 | 36,460,918 |
| Medical Equipment and Systems Portfolio | 70,275,728 | 234,788,941 | 305,064,669 |
| Pharmaceuticals Portfolio | 53,177,399 | 179,077,665 | 232,255,064 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital. In November 2016, the Board of Trustees approved the elimination of these redemption fees for Biotechnology Portfolio, Health Care Portfolio, Medical Equipment and Systems Portfolio and Pharmaceuticals Portfolio effective December 12, 2016.
Restricted Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
Consolidated Subsidiary. The Biotechnology Portfolio invests in certain investments through a wholly-owned subsidiary ("Subsidiary"), which may be subject to federal and state taxes upon disposition.
As of period end, Biotechnology Portfolio held an investment of $48,464,010 in this Subsidiary, representing .51% of the Fund's net assets. The financial statements have been consolidated and include accounts of Biotechnology Portfolio and each Subsidiary. Accordingly, all inter-company transactions and balances have been eliminated.
Any cash held by the Subsidiary is restricted as to its use and is presented as Restricted cash in the Statement of Assets and Liabilities.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, are noted in the table below.
| Purchases ($) | Sales ($) | |
| Biotechnology Portfolio | 2,677,506,710 | 5,346,268,036 |
| Health Care Portfolio | 3,477,131,803 | 5,008,612,425 |
| Health Care Services Portfolio | 212,050,630 | 430,521,832 |
| Medical Equipment and Systems Portfolio | 2,014,187,256 | 1,434,117,905 |
| Pharmaceuticals Portfolio | 1,047,189,381 | 1,730,592,864 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total | |
| Biotechnology Portfolio | .30% | .25% | .55% |
| Health Care Portfolio | .30% | .25% | .55% |
| Health Care Services Portfolio | .30% | .25% | .55% |
| Medical Equipment and Systems Portfolio | .30% | .25% | .55% |
| Pharmaceuticals Portfolio | .30% | .25% | .55% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
| Biotechnology Portfolio | .17% |
| Health Care Portfolio | .16% |
| Health Care Services Portfolio | .18% |
| Medical Equipment and Systems Portfolio | .17% |
| Pharmaceuticals Portfolio | .20% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Biotechnology Portfolio | $372,105 |
| Health Care Portfolio | 129,308 |
| Health Care Services Portfolio | 6,703 |
| Medical Equipment and Systems Portfolio | 46,131 |
| Pharmaceuticals Portfolio | 46,448 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with FMR or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Health Care Portfolio | Borrower | $13,163,125 | .61% | $7,085 |
| Health Care Services Portfolio | Borrower | $7,526,800 | .60% | $1,889 |
| Medical Equipment and Systems Portfolio | Borrower | $15,092,600 | .59% | $1,231 |
| Pharmaceuticals Portfolio | Borrower | $10,069,731 | .60% | $4,381 |
Interfund Trades. The Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Redemptions In-Kind. During the period, 1,587,958 shares of Health Care Portfolio held by an affiliated entity were redeemed in-kind for investments and cash with a value of $284,244,539. The net realized gain of $90,840,956 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. Health Care Portfolio recognized no gain or loss for federal income tax purposes.
Other. During the period, the investment adviser reimbursed Biotechnology Portfolio for certain losses in the amount of $191,622.
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
| Biotechnology Portfolio | $31,090 |
| Health Care Portfolio | 22,539 |
| Health Care Services Portfolio | 2,511 |
| Medical Equipment and Systems Portfolio | 7,608 |
| Pharmaceuticals Portfolio | 4,539 |
During the period, the Funds did not borrow on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. The Funds or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Funds may apply collateral received from the borrower against the obligation. The Funds may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
8. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Health Care Portfolio | $12,627,000 | .91% | $638 |
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of Certain Funds include an amount in addition to trade execution, which may be rebated back to the Funds to offset certain expenses. In addition,through arrangements with each applicable Fund's custodian, credits realized as a result of certain uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage Service reduction | Custody expense reduction | |
| Biotechnology Portfolio | $336,797 | $2,214 |
| Health Care Portfolio | 162,952 | 386 |
| Health Care Services Portfolio | 7,941 | – |
| Medical Equipment and Systems Portfolio | 77,305 | 123 |
| Pharmaceuticals Portfolio | 59,443 | – |
In addition, during the period the investment adviser reimbursed and/or waived a portion of operating expenses as follows:
| Reimbursement | |
| Biotechnology Portfolio | $ 98,141 |
| Health Care Portfolio | 62,977 |
| Health Care Services Portfolio | 6,949 |
| Medical Equipment and Systems Portfolio | 20,593 |
| Pharmaceuticals Portfolio | 12,545 |
10. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Biotechnology Portfolio, Health Care Portfolio, Health Care Services Portfolio, Medical Equipment and Systems Portfolio and Pharmaceuticals Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Biotechnology Portfolio, Health Care Portfolio, Health Care Services Portfolio, Medical Equipment and Systems Portfolio and Pharmaceuticals Portfolio (the "Funds") as of February 28, 2017, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of February 28, 2017 by correspondence with the custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 17, 2017
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 90 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the funds is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Each fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
* Determined to be an "Interested Trustee" by virtue of, among other things, his or her affiliation with the trust or various entities under common control with SelectCo.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed the oil refining, drilling and marketing of petroleum products (including specialty petroleum products), recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present) and serves as its President and CEO. Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006. Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Trustee or Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006), and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue serves as a Member (2012-present) and Co-Chairman (2016-present) of the Board of Directors of United Way of New York, Member of the Board of Directors of NYC Leadership Academy (2012-present) and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services), Treasurer of United Way of New York (2012-2016), and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Carol B. Tomé (1957)
Year of Election or Appointment: 2017
Member of the Advisory Board
Ms. Tomé also serves as Trustee or Member of the Advisory Board of other Fidelity® funds. Ms. Tomé is Chief Financial Officer (2001-present) and Executive Vice President of Corporate Services (2007-present) of The Home Depot, Inc. (home improvement retailer) and a Director (2003-present) and Chair of the Audit Committee (2004-present) of United Parcel Service, Inc. (package delivery and supply chain management). Previously, Ms. Tomé served as Senior Vice President of Finance and Accounting/Treasurer (2000-2007) and Vice President and Treasurer (1995-2000) of The Home Depot, Inc. and Chair of the Board (2010-2012), Vice Chair of the Board (2009 and 2013), and a Director (2008-2013) of the Federal Reserve Bank of Atlanta. Ms. Tomé is also a director or trustee of many community and professional organizations.
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Interim Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (UK) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
Jeffrey S. Christian (1961)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Christian also serves as Assistant Treasurer of other funds. Mr. Christian is an employee of Fidelity Investments (2003-present).
William C. Coffey (1969)
Year of Election or Appointment: 2009
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Senior Vice President of Fidelity Management & Research Company (FMR) (investment adviser firm, 2016), Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of FMR (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
Colm A. Hogan (1973)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan is an employee of Fidelity Investments (2005-present). Mr. Colm A. Hogan is not related to Mr. Brian B. Hogan.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche (accounting firm, 2005-2013).
Renee Stagnone (1975)
Year of Election or Appointment: 2016
Assistant Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2016 to February 28, 2017).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio-A | Beginning Account Value September 1, 2016 | Ending Account Value February 28, 2017 | Expenses Paid During Period-B September 1, 2016 to February 28, 2017 | |
| Biotechnology Portfolio | .75% | |||
| Actual | $1,000.00 | $1,112.70 | $3.93 | |
| Hypothetical-C | $1,000.00 | $1,021.08 | $3.76 | |
| Health Care Portfolio | .74% | |||
| Actual | $1,000.00 | $1,039.70 | $3.74 | |
| Hypothetical-C | $1,000.00 | $1,021.12 | $3.71 | |
| Health Care Services Portfolio | .78% | |||
| Actual | $1,000.00 | $1,117.70 | $4.10 | |
| Hypothetical-C | $1,000.00 | $1,020.93 | $3.91 | |
| Medical Equipment and Systems Portfolio | .76% | |||
| Actual | $1,000.00 | $1,015.50 | $3.80 | |
| Hypothetical-C | $1,000.00 | $1,021.03 | $3.81 | |
| Pharmaceuticals Portfolio | .81% | |||
| Actual | $1,000.00 | $955.80 | $3.93 | |
| Hypothetical-C | $1,000.00 | $1,020.78 | $4.06 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains | |
| Biotechnology Portfolio | 04/10/17 | 04/07/17 | $0.000 | $0.000 |
| Health Care Portfolio | 04/10/17 | 04/07/17 | $0.000 | $0.000 |
| Health Care Services Portfolio | 04/10/17 | 04/07/17 | $0.000 | $4.373 |
| Medical Equipment and Systems Portfolio | 04/10/17 | 04/07/17 | $0.000 | $0.199 |
| Pharmaceuticals Portfolio | 04/10/17 | 04/07/17 | $0.023 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2017, or, if subsequently determined to be different, the net capital gain of such year.
| Health Care Services Portfolio | $67,290,583 |
| Medical Equipment and Systems Portfolio | $121,795,064 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| December 2016 | |
| Biotechnology Portfolio | – |
| Health Care Portfolio | 100% |
| Health Care Services Portfolio | 100% |
| Medical Equipment and Systems Portfolio | 21% |
| Pharmaceuticals Portfolio | 85% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| December 2016 | |
| Biotechnology Portfolio | – |
| Health Care Portfolio | 100% |
| Health Care Services Portfolio | 100% |
| Medical Equipment and Systems Portfolio | 67% |
| Pharmaceuticals Portfolio | 100% |
The amounts per share which represent income derived from sources within, and taxes paid to, foreign countries or possessions of the United States are as follows:
| Pay Date | Income | Taxes | |
| Pharmaceuticals Portfolio | 04/13/2015 | $0.1227 | $0.0089 |
| 12/21/2015 | $0.1506 | $0.0061 | |
The funds will notify shareholders in January 2018 of amounts for use in preparing 2017 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Biotechnology Portfolio
Health Care Portfolio
Health Care Services Portfolio
Medical Equipment and Systems Portfolio
Pharmaceuticals Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. SelectCo and the sub-advisers are collectively referred to herein as the Investment Advisers. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2017 meeting, the Board unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of the Investment Advisers as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the investment personnel compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the Investment Advisers' investment staffs, including their size, education, experience, and resources, as well as Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board considered that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, compliance, and technology and operations capabilities and resources, which are integral parts of the investment management process.Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians, subcustodians, and pricing vendors; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs; (iv) broadening eligibility requirements for certain lower-priced share classes of, and streamlining the fee structure for, certain existing equity index funds; (v) lowering expense caps for certain existing funds and classes to reduce expenses paid by shareholders; (vi) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vii) rationalizing product lines and gaining increased efficiencies through fund mergers and share class consolidations; (viii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (ix) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; and (x) accelerating the conversion of all remaining Class B shares to Class A shares, which have a lower expense structure.Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.The Board took into account discussions with representatives of SelectCo about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Biotechnology Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2016, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address the fund's performance.In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing fund share classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors, including the following: general market conditions; issuer-specific information; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2016.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should continue to benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Biotechnology Portfolio
Health Care Portfolio
Health Care Services Portfolio
Medical Equipment and Systems Portfolio
Pharmaceuticals Portfolio
SELHC-ANN-0417
1.813640.112
Fidelity® Select Portfolios® Banking Portfolio Brokerage and Investment Management Portfolio Consumer Finance Portfolio Financial Services Portfolio Insurance Portfolio Annual Report February 28, 2017 |
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Contents
Banking Portfolio | |
Brokerage and Investment Management Portfolio | |
Consumer Finance Portfolio | |
Financial Services Portfolio | |
Insurance Portfolio | |
Board Approval of Investment Advisory Contracts and Management Fees |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2017 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Funds. This report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Funds nor Fidelity Distributors Corporation is a bank.
Banking Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Banking Portfolio | 56.16% | 17.00% | 3.08% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Banking Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $13,541 | Banking Portfolio | |
| $20,834 | S&P 500® Index | |
Banking Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Lead Portfolio Manager Matthew Reed: For the year, the fund gained a remarkable 56.16% but nevertheless trailed the 59.23% return of the MSCI U.S. IMI Banks 5% Capped Linked Index. However, the fund far outpaced the S&P 500®. Versus the MSCI industry index, stock selection in diversified banks hampered performance, as did exposure to a number of non-index segments, including consumer finance and property & casualty insurance. At the stock level, overweighting Wells Fargo, which was the fund’s largest holding, was by far its biggest relative detractor. Although the stock managed a 27% gain this period, it considerably lagged many other bank stocks due to ongoing fallout from a scandal surrounding the company’s aggressive sales tactics, which led to the opening of an estimated two million unauthorized deposit and credit-card accounts. Other detractors included overweightings in U.S. Bancorp and Arkansas-based regional lender Bank of the Ozarks, and an out-of-index stake in credit-card issuer Capital One Financial. Conversely, favorable stock picking in regional banks more than offset the negative impact of underweighting this strong-performing group. The top three relative contributors all were overweighted positions in southern regional banks that strongly outperformed the MSCI index: Regions Financial, Prosperity Bancshares and SunTrust Banks. Overweighting Bank of America also worked in our favor, as did avoiding the lagging shares of index stock New York Community Bancorp.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Notes to shareholders: Effective December 31, 2016, Matthew Reed became Lead Portfolio Manager of the fund, after having served as Co-Portfolio Manager with John Sheehy since September 1, 2016. Effective April 3, 2017, Matt became sole Portfolio Manager of the fund.On September 1, 2016, the fund’s supplemental industry benchmark changed to the MSCI U.S. IMI Banks 5% Capped Linked Index. This capped index precludes any single issuer from representing more than 5% of the index at the time of quarterly rebalance, which aligns with certain regulatory limits.
Banking Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Wells Fargo & Co. | 5.8 | 10.2 |
| Bank of America Corp. | 5.1 | 6.2 |
| Huntington Bancshares, Inc. | 5.1 | 4.8 |
| PNC Financial Services Group, Inc. | 5.0 | 2.5 |
| JPMorgan Chase & Co. | 5.0 | 5.3 |
| Citigroup, Inc. | 4.9 | 4.9 |
| U.S. Bancorp | 4.9 | 7.9 |
| Bank of the Ozarks, Inc. | 4.3 | 4.9 |
| M&T Bank Corp. | 3.9 | 4.7 |
| Capital One Financial Corp. | 3.5 | 3.6 |
| 47.5 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Banks | 82.5% | |
| Consumer Finance | 6.7% | |
| Capital Markets | 3.5% | |
| Thrifts & Mortgage Finance | 3.2% | |
| Insurance | 1.2% | |
| All Others* | 2.9% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Banks | 81.9% | |
| Consumer Finance | 6.2% | |
| Capital Markets | 4.0% | |
| Thrifts & Mortgage Finance | 1.6% | |
| Insurance | 0.9% | |
| All Others* | 5.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Banking Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 97.9% | |||
| Shares | Value | ||
| Banks - 82.5% | |||
| Diversified Banks - 27.7% | |||
| Bank of America Corp. | 2,608,200 | $64,370,376 | |
| Citigroup, Inc. | 1,042,800 | 62,369,868 | |
| Comerica, Inc. | 181,300 | 12,923,064 | |
| JPMorgan Chase & Co. | 689,200 | 62,455,304 | |
| The Bank of NT Butterfield & Son Ltd. | 390,000 | 12,714,000 | |
| U.S. Bancorp | 1,114,100 | 61,275,500 | |
| Wells Fargo & Co. | 1,258,192 | 72,824,152 | |
| 348,932,264 | |||
| Regional Banks - 54.8% | |||
| 1st Source Corp. | 272,160 | 12,712,594 | |
| Bank of the Ozarks, Inc. | 996,500 | 54,538,445 | |
| Camden National Corp. | 26,445 | 1,122,855 | |
| CIT Group, Inc. | 812,300 | 34,847,670 | |
| Commerce Bancshares, Inc. | 389,726 | 23,001,629 | |
| Community Trust Bancorp, Inc. | 360,450 | 16,544,655 | |
| ConnectOne Bancorp, Inc. | 109,000 | 2,735,900 | |
| Cullen/Frost Bankers, Inc. | 193,000 | 17,846,710 | |
| CVB Financial Corp. | 789,800 | 18,757,750 | |
| East West Bancorp, Inc. | 455,000 | 24,624,600 | |
| First Citizen Bancshares, Inc. | 71,700 | 25,545,993 | |
| First Republic Bank | 198,700 | 18,644,021 | |
| Hilltop Holdings, Inc. | 303,100 | 8,601,978 | |
| Hope Bancorp, Inc. | 879,220 | 18,815,308 | |
| Huntington Bancshares, Inc. | 4,529,700 | 64,049,958 | |
| Investors Bancorp, Inc. | 1,599,100 | 23,394,833 | |
| Lakeland Financial Corp. | 129,287 | 5,868,337 | |
| M&T Bank Corp. | 297,200 | 49,623,484 | |
| PacWest Bancorp | 408,236 | 22,493,804 | |
| PNC Financial Services Group, Inc. | 496,791 | 63,206,719 | |
| Popular, Inc. | 228,400 | 10,063,304 | |
| Prosperity Bancshares, Inc. | 173,800 | 12,955,052 | |
| Regions Financial Corp. | 1,923,300 | 29,368,791 | |
| Signature Bank (a) | 179,500 | 28,273,045 | |
| SunTrust Banks, Inc. | 674,600 | 40,131,954 | |
| SVB Financial Group (a) | 117,400 | 22,410,486 | |
| Valley National Bancorp | 1,213,500 | 15,010,995 | |
| WesBanco, Inc. | 327,900 | 13,234,044 | |
| Zions Bancorporation | 297,050 | 13,337,545 | |
| 691,762,459 | |||
| TOTAL BANKS | 1,040,694,723 | ||
| Capital Markets - 3.5% | |||
| Asset Management & Custody Banks - 2.3% | |||
| Northern Trust Corp. | 268,100 | 23,418,535 | |
| The Blackstone Group LP | 182,800 | 5,399,912 | |
| 28,818,447 | |||
| Investment Banking & Brokerage - 1.2% | |||
| Goldman Sachs Group, Inc. | 63,500 | 15,751,810 | |
| TOTAL CAPITAL MARKETS | 44,570,257 | ||
| Consumer Finance - 6.7% | |||
| Consumer Finance - 6.7% | |||
| Capital One Financial Corp. | 470,300 | 44,142,358 | |
| Discover Financial Services | 264,100 | 18,788,074 | |
| Synchrony Financial | 592,600 | 21,475,824 | |
| 84,406,256 | |||
| Diversified Financial Services - 0.1% | |||
| Specialized Finance - 0.1% | |||
| ECN Capital Corp. | 333,200 | 888,065 | |
| Insurance - 1.2% | |||
| Property & Casualty Insurance - 1.2% | |||
| First American Financial Corp. | 185,200 | 7,235,764 | |
| FNF Group | 203,400 | 7,796,322 | |
| 15,032,086 | |||
| Thrifts & Mortgage Finance - 3.2% | |||
| Thrifts & Mortgage Finance - 3.2% | |||
| Beneficial Bancorp, Inc. | 578,900 | 9,436,070 | |
| Essent Group Ltd. (a) | 64,700 | 2,252,207 | |
| Meridian Bancorp, Inc. Maryland | 828,365 | 15,780,353 | |
| TFS Financial Corp. | 794,200 | 13,493,458 | |
| 40,962,088 | |||
| Trading Companies & Distributors - 0.7% | |||
| Trading Companies & Distributors - 0.7% | |||
| AerCap Holdings NV (a) | 194,800 | 8,824,440 | |
| TOTAL COMMON STOCKS | |||
| (Cost $935,038,492) | 1,235,377,915 | ||
| Money Market Funds - 2.2% | |||
| Fidelity Cash Central Fund, 0.60% (b) | |||
| (Cost $27,199,897) | 27,196,058 | 27,201,497 | |
| TOTAL INVESTMENT PORTFOLIO - 100.1% | |||
| (Cost $962,238,389) | 1,262,579,412 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.1)% | (720,224) | ||
| NET ASSETS - 100% | $1,261,859,188 |
Legend
(a) Non-income producing
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $100,934 |
| Fidelity Securities Lending Cash Central Fund | 17,959 |
| Total | $118,893 |
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Banking Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value — See accompanying schedule: Unaffiliated issuers (cost $935,038,492) | $1,235,377,915 | |
| Fidelity Central Funds (cost $27,199,897) | 27,201,497 | |
| Total Investments (cost $962,238,389) | $1,262,579,412 | |
| Receivable for investments sold | 5,849,557 | |
| Receivable for fund shares sold | 3,152,598 | |
| Dividends receivable | 799,003 | |
| Distributions receivable from Fidelity Central Funds | 14,600 | |
| Prepaid expenses | 2,157 | |
| Other receivables | 17,157 | |
| Total assets | 1,272,414,484 | |
| Liabilities | ||
| Payable for investments purchased | $5,666,758 | |
| Payable for fund shares redeemed | 4,093,981 | |
| Accrued management fee | 559,262 | |
| Other affiliated payables | 198,768 | |
| Other payables and accrued expenses | 36,527 | |
| Total liabilities | 10,555,296 | |
| Net Assets | $1,261,859,188 | |
| Net Assets consist of: | ||
| Paid in capital | $979,963,625 | |
| Undistributed net investment income | 151,758 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (18,615,739) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 300,359,544 | |
| Net Assets, for 37,527,404 shares outstanding | $1,261,859,188 | |
| Net Asset Value, offering price and redemption price per share ($1,261,859,188 ÷ 37,527,404 shares) | $33.63 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $14,616,122 | |
| Income from Fidelity Central Funds | 118,893 | |
| Total income | 14,735,015 | |
| Expenses | ||
| Management fee | $4,103,150 | |
| Transfer agent fees | 1,339,143 | |
| Accounting and security lending fees | 264,047 | |
| Custodian fees and expenses | 19,266 | |
| Independent trustees' fees and expenses | 15,636 | |
| Registration fees | 91,360 | |
| Audit | 43,876 | |
| Legal | 10,123 | |
| Miscellaneous | 8,474 | |
| Total expenses before reductions | 5,895,075 | |
| Expense reductions | (59,916) | 5,835,159 |
| Net investment income (loss) | 8,899,856 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 939,974 | |
| Fidelity Central Funds | 5,731 | |
| Foreign currency transactions | 5,013 | |
| Total net realized gain (loss) | 950,718 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 316,483,290 | |
| Assets and liabilities in foreign currencies | 19,270 | |
| Total change in net unrealized appreciation (depreciation) | 316,502,560 | |
| Net gain (loss) | 317,453,278 | |
| Net increase (decrease) in net assets resulting from operations | $326,353,134 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $8,899,856 | $8,209,104 |
| Net realized gain (loss) | 950,718 | (4,131,582) |
| Change in net unrealized appreciation (depreciation) | 316,502,560 | (99,278,407) |
| Net increase (decrease) in net assets resulting from operations | 326,353,134 | (95,200,885) |
| Distributions to shareholders from net investment income | (7,718,086) | (7,291,678) |
| Distributions to shareholders from net realized gain | – | (28,052,619) |
| Total distributions | (7,718,086) | (35,344,297) |
| Share transactions | ||
| Proceeds from sales of shares | 644,775,316 | 275,436,278 |
| Reinvestment of distributions | 7,448,757 | 34,051,334 |
| Cost of shares redeemed | (274,527,992) | (198,124,823) |
| Net increase (decrease) in net assets resulting from share transactions | 377,696,081 | 111,362,789 |
| Redemption fees | 49,199 | 25,889 |
| Total increase (decrease) in net assets | 696,380,328 | (19,156,504) |
| Net Assets | ||
| Beginning of period | 565,478,860 | 584,635,364 |
| End of period | $1,261,859,188 | $565,478,860 |
| Other Information | ||
| Undistributed net investment income end of period | $151,758 | $556 |
| Shares | ||
| Sold | 21,208,450 | 10,264,504 |
| Issued in reinvestment of distributions | 232,556 | 1,335,122 |
| Redeemed | (9,972,925) | (7,822,984) |
| Net increase (decrease) | 11,468,081 | 3,776,642 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Banking Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $21.70 | $26.24 | $26.11 | $20.58 | $17.83 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .33 | .33 | .30 | .29 | .26 |
| Net realized and unrealized gain (loss) | 11.85 | (3.43) | 1.04 | 5.97 | 2.73 |
| Total from investment operations | 12.18 | (3.10) | 1.34 | 6.26 | 2.99 |
| Distributions from net investment income | (.25) | (.28) | (.34) | (.20) | (.24) |
| Distributions from net realized gain | – | (1.16) | (.87) | (.53) | – |
| Total distributions | (.25) | (1.44) | (1.21) | (.73) | (.24) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $33.63 | $21.70 | $26.24 | $26.11 | $20.58 |
| Total ReturnD | 56.16% | (12.57)% | 5.30% | 30.48% | 16.86% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .79% | .79% | .80% | .81% | .85% |
| Expenses net of fee waivers, if any | .79% | .79% | .80% | .81% | .85% |
| Expenses net of all reductions | .79% | .79% | .79% | .80% | .83% |
| Net investment income (loss) | 1.20% | 1.27% | 1.14% | 1.22% | 1.37% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,261,859 | $565,479 | $584,635 | $809,980 | $530,562 |
| Portfolio turnover rateG | 34% | 63% | 65% | 91% | 69% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Brokerage and Investment Management Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Brokerage and Investment Management Portfolio | 31.76% | 11.50% | 2.96% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Brokerage and Investment Management Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $13,388 | Brokerage and Investment Management Portfolio | |
| $20,834 | S&P 500® Index | |
Brokerage and Investment Management Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Daniel Dittler: For the year, the fund gained 31.76%, lagging the 38.22% return of the MSCI U.S. IMI Capital Markets 5% Capped Linked Index but beating the S&P 500®. Most of the underperformance came from stock picks in the top-performing investment banking & brokerage group. Our biggest individual detractors here were smaller-cap electronic trading companies Virtu Financial and Investment Technology Group (ITG). Both stocks were pressured by muted market volatility that kept trading activity in check. We significantly reduced our stake in Virtu and eliminated ITG before period end. Our average underweighting and the timing of our ownership in small online broker TD Ameritrade Holding also hurt, as the stock returned 40% in the industry index but much less in the fund. We began adding to TD Ameritrade in December, and it was one of our largest positions at period end. Stock picks in the financial exchanges & data category gave the biggest boost to relative performance, thanks partly to our underweighting in credit ratings agency Moody’s, which lagged in the post-election rally. In the asset management & custody banks group, our sizable underexposure to Baltimore-based mutual fund manager T. Rowe Price helped, as weaker-than-expected asset inflows and concern about pending regulations weighed on its performance.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Notes to shareholders: On September 1, 2016, the fund’s supplemental industry benchmark was renamed the MSCI U.S. IMI Capital Markets 5% Capped Linked Index in order to reflect the fund’s benchmark-capping methodology. This methodology precludes any single issuer from representing more than 5% of the index at the time of quarterly rebalance, which aligns with certain regulatory limits. Also, in line with changes to the MSCI industry index effective September 1, 2016, the fund’s focus broadened to include the financial exchanges & data category, which includes companies involved in providing data and decision support tools to the capital market industry.Brokerage and Investment Management Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| BlackRock, Inc. Class A | 6.0 | 8.2 |
| Morgan Stanley | 6.0 | 5.7 |
| S&P Global, Inc. | 5.2 | 4.5 |
| CBOE Holdings, Inc. | 4.8 | 0.0 |
| CME Group, Inc. | 4.7 | 2.0 |
| Charles Schwab Corp. | 4.6 | 5.1 |
| Ameriprise Financial, Inc. | 4.1 | 0.5 |
| TD Ameritrade Holding Corp. | 4.0 | 3.6 |
| Bank of New York Mellon Corp. | 3.5 | 5.1 |
| Legg Mason, Inc. | 3.3 | 6.0 |
| 46.2 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Capital Markets | 95.8% | |
| Diversified Financial Services | 0.9% | |
| Real Estate Management & Development | 0.3% | |
| All Others* | 3.0% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Capital Markets | 89.6% | |
| Diversified Financial Services | 9.7% | |
| Consumer Finance | 1.0% | |
| All Others*,** | (0.3)% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
** Not included in the pie chart
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Brokerage and Investment Management Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 97.0% | |||
| Shares | Value | ||
| Capital Markets - 95.8% | |||
| Asset Management & Custody Banks - 39.4% | |||
| Affiliated Managers Group, Inc. | 70,500 | $11,839,065 | |
| Ameriprise Financial, Inc. | 126,400 | 16,621,600 | |
| Apollo Global Management LLC Class A | 275,900 | 6,273,966 | |
| Bank of New York Mellon Corp. | 298,047 | 14,049,936 | |
| BlackRock, Inc. Class A | 62,700 | 24,293,742 | |
| Diamond Hill Investment Group, Inc. | 12,591 | 2,524,747 | |
| Eaton Vance Corp. (non-vtg.) | 214,100 | 9,983,483 | |
| Fifth Street Asset Management, Inc. Class A | 255,518 | 1,315,918 | |
| Financial Engines, Inc. (a) | 90,600 | 4,013,580 | |
| Franklin Resources, Inc. | 128,500 | 5,530,640 | |
| Invesco Ltd. | 395,000 | 12,715,050 | |
| Legg Mason, Inc. | 356,642 | 13,452,536 | |
| Northern Trust Corp. | 113,000 | 9,870,550 | |
| Pzena Investment Management, Inc. | 423,400 | 4,250,936 | |
| SEI Investments Co. | 77,100 | 3,881,985 | |
| State Street Corp. | 111,300 | 8,871,723 | |
| T. Rowe Price Group, Inc. | 54,900 | 3,909,429 | |
| Virtus Investment Partners, Inc. (a) | 36,100 | 3,958,365 | |
| WisdomTree Investments, Inc. (a) | 248,800 | 2,266,568 | |
| 159,623,819 | |||
| Financial Exchanges & Data - 23.3% | |||
| CBOE Holdings, Inc. | 250,200 | 19,528,110 | |
| CME Group, Inc. | 155,800 | 18,923,468 | |
| IntercontinentalExchange, Inc. | 137,700 | 7,866,801 | |
| MarketAxess Holdings, Inc. | 32,200 | 6,286,406 | |
| Moody's Corp. | 108,200 | 12,050,234 | |
| MSCI, Inc. | 64,400 | 6,091,596 | |
| S&P Global, Inc. | 163,100 | 21,116,557 | |
| The NASDAQ OMX Group, Inc. | 35,300 | 2,510,183 | |
| 94,373,355 | |||
| Investment Banking & Brokerage - 33.1% | |||
| BGC Partners, Inc. Class A | 691,500 | 7,800,120 | |
| Charles Schwab Corp. | 461,000 | 18,629,010 | |
| E*TRADE Financial Corp. (b) | 238,400 | 8,227,184 | |
| Evercore Partners, Inc. Class A | 110,200 | 8,766,410 | |
| Goldman Sachs Group, Inc. | 53,800 | 13,345,628 | |
| Greenhill & Co., Inc. | 139,500 | 4,122,225 | |
| Houlihan Lokey | 36,700 | 1,155,683 | |
| Lazard Ltd. Class A | 84,300 | 3,629,958 | |
| Moelis & Co. Class A | 107,400 | 3,952,320 | |
| Morgan Stanley | 530,900 | 24,246,203 | |
| Raymond James Financial, Inc. | 162,000 | 12,726,720 | |
| Stifel Financial Corp. (b) | 135,700 | 7,322,372 | |
| TD Ameritrade Holding Corp. | 419,400 | 16,398,540 | |
| Virtu Financial, Inc. Class A | 227,166 | 3,941,330 | |
| 134,263,703 | |||
| TOTAL CAPITAL MARKETS | 388,260,877 | ||
| Diversified Financial Services - 0.9% | |||
| Specialized Finance - 0.9% | |||
| Bats Global Markets, Inc. | 109,700 | 3,853,761 | |
| Real Estate Management & Development - 0.3% | |||
| Real Estate Services - 0.3% | |||
| Invitation Homes, Inc. | 48,800 | 1,063,352 | |
| TOTAL COMMON STOCKS | |||
| (Cost $335,490,338) | 393,177,990 | ||
| Money Market Funds - 4.5% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 10,130,633 | 10,132,659 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 7,898,377 | 7,899,957 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $18,031,881) | 18,032,616 | ||
| TOTAL INVESTMENT PORTFOLIO - 101.5% | |||
| (Cost $353,522,219) | 411,210,606 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.5)% | (5,927,748) | ||
| NET ASSETS - 100% | $405,282,858 |
Legend
(a) Security or a portion of the security is on loan at period end.
(b) Non-income producing
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $35,979 |
| Fidelity Securities Lending Cash Central Fund | 54,281 |
| Total | $90,260 |
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Brokerage and Investment Management Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $7,584,310) — See accompanying schedule: Unaffiliated issuers (cost $335,490,338) | $393,177,990 | |
| Fidelity Central Funds (cost $18,031,881) | 18,032,616 | |
| Total Investments (cost $353,522,219) | $411,210,606 | |
| Receivable for investments sold | 3,246,018 | |
| Receivable for fund shares sold | 805,839 | |
| Dividends receivable | 630,421 | |
| Distributions receivable from Fidelity Central Funds | 7,254 | |
| Prepaid expenses | 1,122 | |
| Other receivables | 35,391 | |
| Total assets | 415,936,651 | |
| Liabilities | ||
| Payable for investments purchased | $2,043,810 | |
| Payable for fund shares redeemed | 397,941 | |
| Accrued management fee | 180,821 | |
| Other affiliated payables | 72,579 | |
| Other payables and accrued expenses | 58,492 | |
| Collateral on securities loaned | 7,900,150 | |
| Total liabilities | 10,653,793 | |
| Net Assets | $405,282,858 | |
| Net Assets consist of: | ||
| Paid in capital | $342,129,031 | |
| Undistributed net investment income | 83,762 | |
| Accumulated undistributed net realized gain (loss) on investments | 5,381,678 | |
| Net unrealized appreciation (depreciation) on investments | 57,688,387 | |
| Net Assets, for 5,697,559 shares outstanding | $405,282,858 | |
| Net Asset Value, offering price and redemption price per share ($405,282,858 ÷ 5,697,559 shares) | $71.13 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $7,421,419 | |
| Income from Fidelity Central Funds | 90,260 | |
| Total income | 7,511,679 | |
| Expenses | ||
| Management fee | $1,842,821 | |
| Transfer agent fees | 665,101 | |
| Accounting and security lending fees | 132,154 | |
| Custodian fees and expenses | 14,169 | |
| Independent trustees' fees and expenses | 7,710 | |
| Registration fees | 25,365 | |
| Audit | 43,924 | |
| Legal | 6,259 | |
| Miscellaneous | 5,327 | |
| Total expenses before reductions | 2,742,830 | |
| Expense reductions | (44,055) | 2,698,775 |
| Net investment income (loss) | 4,812,904 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 13,309,597 | |
| Fidelity Central Funds | 2,428 | |
| Total net realized gain (loss) | 13,312,025 | |
| Change in net unrealized appreciation (depreciation) on investment securities | 74,061,176 | |
| Net gain (loss) | 87,373,201 | |
| Net increase (decrease) in net assets resulting from operations | $92,186,105 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $4,812,904 | $4,952,408 |
| Net realized gain (loss) | 13,312,025 | 12,759,630 |
| Change in net unrealized appreciation (depreciation) | 74,061,176 | (125,830,585) |
| Net increase (decrease) in net assets resulting from operations | 92,186,105 | (108,118,547) |
| Distributions to shareholders from net investment income | (4,381,249) | (4,622,816) |
| Distributions to shareholders from net realized gain | (73,811) | (21,141,799) |
| Total distributions | (4,455,060) | (25,764,615) |
| Share transactions | ||
| Proceeds from sales of shares | 79,591,297 | 46,082,867 |
| Reinvestment of distributions | 4,230,142 | 24,647,782 |
| Cost of shares redeemed | (76,843,261) | (204,236,777) |
| Net increase (decrease) in net assets resulting from share transactions | 6,978,178 | (133,506,128) |
| Redemption fees | 3,550 | 6,244 |
| Total increase (decrease) in net assets | 94,712,773 | (267,383,046) |
| Net Assets | ||
| Beginning of period | 310,570,085 | 577,953,131 |
| End of period | $405,282,858 | $310,570,085 |
| Other Information | ||
| Undistributed net investment income end of period | $83,762 | $– |
| Distributions in excess of net investment income end of period | $– | $(14,596) |
| Shares | ||
| Sold | 1,190,777 | 640,049 |
| Issued in reinvestment of distributions | 61,844 | 382,319 |
| Redeemed | (1,237,856) | (3,068,358) |
| Net increase (decrease) | 14,765 | (2,045,990) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Brokerage and Investment Management Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $54.65 | $74.78 | $71.99 | $55.99 | $47.28 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .89 | .72 | .96 | .99 | 1.31 |
| Net realized and unrealized gain (loss) | 16.44 | (16.77) | 4.39 | 15.41 | 8.52 |
| Total from investment operations | 17.33 | (16.05) | 5.35 | 16.40 | 9.83 |
| Distributions from net investment income | (.83) | (.74) | (.83) | (.39) | (1.12) |
| Distributions from net realized gain | (.01) | (3.34) | (1.73) | (.02) | – |
| Total distributions | (.85)C | (4.08) | (2.56) | (.40)D | (1.12) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $71.13 | $54.65 | $74.78 | $71.99 | $55.99 |
| Total ReturnF | 31.76% | (22.23)% | 7.43% | 29.29% | 21.08% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .82% | .79% | .79% | .82% | .87% |
| Expenses net of fee waivers, if any | .82% | .79% | .79% | .82% | .87% |
| Expenses net of all reductions | .80% | .78% | .79% | .80% | .78% |
| Net investment income (loss) | 1.43% | 1.02% | 1.32% | 1.52% | 2.72% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $405,283 | $310,570 | $577,953 | $834,222 | $604,773 |
| Portfolio turnover rateI | 146% | 67% | 31% | 182% | 308% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $.85 per share is comprised of distributions from net investment income of $.831 and distributions from net realized gain of $.014 per share.
D Total distributions of $.40 per share is comprised of distributions from net investment income of $.388 and distributions from net realized gain of $.016 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Consumer Finance Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Consumer Finance Portfolio | 33.57% | 13.76% | (4.75)% |
Prior to December 1, 2010, the fund was named Home Finance Portfolio, and the fund operated under certain different investment policies and compared its performance to a different additional index. The fund's historical performance may not represent its current investment policies.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Consumer Finance Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $6,149 | Consumer Finance Portfolio | |
| $20,834 | S&P 500® Index | |
Consumer Finance Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Shilpa Mehra: For the year, the fund returned 33.57%, lagging the 36.05% gain of the S&P® Consumer Finance Index but beating the S&P 500®. Most of the fund’s underperformance versus the S&P industry index came from a sizable overweighting and unfavorable stock picks in the data processing & outsourced services segment. Individual detractors here included debit and prepaid gift-card company Blackhawk Network Holding, which was pressured by the prolonged transition to the new chip-and-pin card technology. Other disappointments included Total System Services (TSYS®) and Global Payments, card processors that stand to gain as more payments shift from cash to plastic. Both posted strong absolute returns, but lagged the industry index due to a post-election investor rotation into more-economically sensitive stocks. Blackhawk, TSYS® and Global Payment were not in the industry index. By contrast, security selection in the consumer finance segment gave a notable boost to relative performance, led by timely trading in online lender LendingClub, which we purchased after the stock had already seen a sizable decline. An investment in private student lender SLM (or Sallie Mae) also helped, buoyed by post-election expectations of deregulation, potential tax cuts and a reduction in government-funded loans that would expand the market for private lenders.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Consumer Finance Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Synchrony Financial | 7.1 | 5.0 |
| Capital One Financial Corp. | 6.6 | 4.9 |
| Visa, Inc. Class A | 6.3 | 8.1 |
| MasterCard, Inc. Class A | 5.5 | 7.1 |
| Discover Financial Services | 4.9 | 6.0 |
| Ally Financial, Inc. | 4.5 | 3.9 |
| New York Community Bancorp, Inc. | 4.1 | 1.4 |
| SLM Corp. | 3.6 | 2.8 |
| Santander Consumer U.S.A. Holdings, Inc. | 3.0 | 2.0 |
| Global Payments, Inc. | 2.8 | 5.4 |
| 48.4 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Consumer Finance | 40.4% | |
| Thrifts & Mortgage Finance | 22.3% | |
| IT Services | 20.6% | |
| Mortgage Real Estate Investment Trusts | 11.5% | |
| Banks | 4.1% | |
| All Others* | 1.1% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Consumer Finance | 38.1% | |
| IT Services | 28.9% | |
| Real Estate Investment Trusts | 16.9% | |
| Thrifts & Mortgage Finance | 15.2% | |
| Professional Services | 0.5% | |
| All Others* | 0.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Consumer Finance Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 99.6% | |||
| Shares | Value | ||
| Banks - 4.1% | |||
| Diversified Banks - 3.3% | |||
| Bank of America Corp. | 35,400 | $873,672 | |
| Wells Fargo & Co. | 44,100 | 2,552,508 | |
| 3,426,180 | |||
| Regional Banks - 0.8% | |||
| SVB Financial Group (a) | 4,200 | 801,738 | |
| TOTAL BANKS | 4,227,918 | ||
| Consumer Finance - 40.4% | |||
| Consumer Finance - 40.4% | |||
| Ally Financial, Inc. | 205,400 | 4,619,446 | |
| American Express Co. | 31,600 | 2,529,896 | |
| Capital One Financial Corp. | 71,000 | 6,664,060 | |
| Credit Acceptance Corp. (a)(b) | 12,175 | 2,440,601 | |
| Discover Financial Services | 70,600 | 5,022,484 | |
| First Cash Financial Services, Inc. | 13,211 | 585,908 | |
| LendingClub Corp. (a) | 60,000 | 320,400 | |
| Navient Corp. | 127,300 | 1,961,693 | |
| Nelnet, Inc. Class A | 7,400 | 331,446 | |
| OneMain Holdings, Inc. (a) | 96,500 | 2,703,930 | |
| Santander Consumer U.S.A. Holdings, Inc. (a) | 206,600 | 3,053,548 | |
| SLM Corp. | 305,800 | 3,666,542 | |
| Synchrony Financial | 200,700 | 7,273,366 | |
| 41,173,320 | |||
| IT Services - 20.6% | |||
| Data Processing & Outsourced Services - 20.6% | |||
| Blackhawk Network Holdings, Inc. (a) | 18,800 | 685,260 | |
| FleetCor Technologies, Inc. (a) | 7,200 | 1,224,000 | |
| Global Payments, Inc. | 35,800 | 2,852,902 | |
| MasterCard, Inc. Class A | 50,500 | 5,578,230 | |
| PayPal Holdings, Inc. (a) | 49,000 | 2,058,000 | |
| Square, Inc. (a) | 34,500 | 597,540 | |
| Total System Services, Inc. | 19,200 | 1,046,016 | |
| Vantiv, Inc. (a) | 8,100 | 529,578 | |
| Visa, Inc. Class A | 72,936 | 6,413,992 | |
| 20,985,518 | |||
| Mortgage Real Estate Investment Trusts - 11.5% | |||
| Mortgage REITs - 11.5% | |||
| Agnc Investment Corp. | 116,300 | 2,282,969 | |
| Altisource Residential Corp. Class B | 28,900 | 387,838 | |
| Annaly Capital Management, Inc. | 231,215 | 2,566,487 | |
| Capstead Mortgage Corp. | 35,000 | 370,300 | |
| Chimera Investment Corp. | 95,580 | 1,838,959 | |
| Invesco Mortgage Capital, Inc. | 14,057 | 218,586 | |
| MFA Financial, Inc. | 168,900 | 1,354,578 | |
| New Residential Investment Corp. | 90,850 | 1,532,640 | |
| PennyMac Mortgage Investment Trust | 29,200 | 492,312 | |
| Redwood Trust, Inc. | 41,700 | 682,629 | |
| 11,727,298 | |||
| Professional Services - 0.7% | |||
| Research & Consulting Services - 0.7% | |||
| Equifax, Inc. | 5,100 | 668,661 | |
| Thrifts & Mortgage Finance - 22.3% | |||
| Thrifts & Mortgage Finance - 22.3% | |||
| Astoria Financial Corp. | 70,800 | 1,309,092 | |
| BofI Holding, Inc. (a)(b) | 25,600 | 807,424 | |
| Capitol Federal Financial, Inc. | 70,500 | 1,063,845 | |
| EverBank Financial Corp. | 42,000 | 816,480 | |
| Flagstar Bancorp, Inc. (a) | 13,900 | 394,760 | |
| HomeStreet, Inc. (a) | 13,900 | 379,470 | |
| Kearny Financial Corp. | 43,100 | 661,585 | |
| Meridian Bancorp, Inc. Maryland | 64,000 | 1,219,200 | |
| MGIC Investment Corp. (a) | 178,828 | 1,904,518 | |
| Nationstar Mortgage Holdings, Inc. (a)(b) | 63,100 | 1,145,896 | |
| New York Community Bancorp, Inc. (b) | 270,600 | 4,134,768 | |
| Northwest Bancshares, Inc. | 38,600 | 700,204 | |
| PHH Corp. (a) | 18,000 | 227,160 | |
| Provident Financial Services, Inc. | 33,600 | 892,080 | |
| Radian Group, Inc. | 98,865 | 1,839,878 | |
| TFS Financial Corp. | 164,600 | 2,796,554 | |
| Washington Federal, Inc. | 40,400 | 1,367,540 | |
| WSFS Financial Corp. | 22,700 | 1,035,120 | |
| 22,695,574 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $75,334,671) | 101,478,289 | ||
| Money Market Funds - 6.9% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 23,826 | 23,831 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 6,976,201 | 6,977,597 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $7,000,899) | 7,001,428 | ||
| TOTAL INVESTMENT PORTFOLIO - 106.5% | |||
| (Cost $82,335,570) | 108,479,717 | ||
| NET OTHER ASSETS (LIABILITIES) - (6.5)% | (6,656,752) | ||
| NET ASSETS - 100% | $101,822,965 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $2,100 |
| Fidelity Securities Lending Cash Central Fund | 95,620 |
| Total | $97,720 |
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Consumer Finance Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $6,705,550) — See accompanying schedule: Unaffiliated issuers (cost $75,334,671) | $101,478,289 | |
| Fidelity Central Funds (cost $7,000,899) | 7,001,428 | |
| Total Investments (cost $82,335,570) | $108,479,717 | |
| Receivable for fund shares sold | 498,686 | |
| Dividends receivable | 55,401 | |
| Distributions receivable from Fidelity Central Funds | 7,068 | |
| Prepaid expenses | 327 | |
| Other receivables | 931 | |
| Total assets | 109,042,130 | |
| Liabilities | ||
| Payable for fund shares redeemed | $135,085 | |
| Accrued management fee | 46,067 | |
| Other affiliated payables | 24,143 | |
| Other payables and accrued expenses | 36,977 | |
| Collateral on securities loaned | 6,976,893 | |
| Total liabilities | 7,219,165 | |
| Net Assets | $101,822,965 | |
| Net Assets consist of: | ||
| Paid in capital | $87,616,274 | |
| Undistributed net investment income | 99,540 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (12,036,996) | |
| Net unrealized appreciation (depreciation) on investments | 26,144,147 | |
| Net Assets, for 7,264,414 shares outstanding | $101,822,965 | |
| Net Asset Value, offering price and redemption price per share ($101,822,965 ÷ 7,264,414 shares) | $14.02 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $2,357,932 | |
| Income from Fidelity Central Funds | 97,720 | |
| Total income | 2,455,652 | |
| Expenses | ||
| Management fee | $506,596 | |
| Transfer agent fees | 240,952 | |
| Accounting and security lending fees | 36,647 | |
| Custodian fees and expenses | 13,558 | |
| Independent trustees' fees and expenses | 2,052 | |
| Registration fees | 19,388 | |
| Audit | 43,848 | |
| Legal | 2,629 | |
| Miscellaneous | 1,363 | |
| Total expenses before reductions | 867,033 | |
| Expense reductions | (4,729) | 862,304 |
| Net investment income (loss) | 1,593,348 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 375,453 | |
| Fidelity Central Funds | 208 | |
| Foreign currency transactions | 624 | |
| Total net realized gain (loss) | 376,285 | |
| Change in net unrealized appreciation (depreciation) on investment securities | 24,444,332 | |
| Net gain (loss) | 24,820,617 | |
| Net increase (decrease) in net assets resulting from operations | $26,413,965 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $1,593,348 | $1,793,818 |
| Net realized gain (loss) | 376,285 | 9,920,299 |
| Change in net unrealized appreciation (depreciation) | 24,444,332 | (26,199,612) |
| Net increase (decrease) in net assets resulting from operations | 26,413,965 | (14,485,495) |
| Distributions to shareholders from net investment income | (1,693,811) | (1,629,098) |
| Distributions to shareholders from net realized gain | (2,140,248) | (9,545,636) |
| Total distributions | (3,834,059) | (11,174,734) |
| Share transactions | ||
| Proceeds from sales of shares | 24,529,703 | 18,405,416 |
| Reinvestment of distributions | 3,691,039 | 10,808,940 |
| Cost of shares redeemed | (35,623,808) | (51,481,295) |
| Net increase (decrease) in net assets resulting from share transactions | (7,403,066) | (22,266,939) |
| Redemption fees | 3,187 | 1,416 |
| Total increase (decrease) in net assets | 15,180,027 | (47,925,752) |
| Net Assets | ||
| Beginning of period | 86,642,938 | 134,568,690 |
| End of period | $101,822,965 | $86,642,938 |
| Other Information | ||
| Undistributed net investment income end of period | $99,540 | $206,127 |
| Shares | ||
| Sold | 1,911,163 | 1,360,055 |
| Issued in reinvestment of distributions | 300,993 | 831,451 |
| Redeemed | (2,869,642) | (3,874,342) |
| Net increase (decrease) | (657,486) | (1,682,836) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Consumer Finance Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $10.94 | $14.01 | $16.16 | $15.37 | $12.62 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .21 | .20 | .22 | .34 | .28 |
| Net realized and unrealized gain (loss) | 3.38 | (1.99) | .95 | 3.18 | 2.72 |
| Total from investment operations | 3.59 | (1.79) | 1.17 | 3.52 | 3.00 |
| Distributions from net investment income | (.23) | (.20) | (.30) | (.40) | (.24) |
| Distributions from net realized gain | (.28) | (1.08) | (3.03) | (2.33) | (.01) |
| Total distributions | (.51) | (1.28) | (3.32)C | (2.73) | (.25) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $14.02 | $10.94 | $14.01 | $16.16 | $15.37 |
| Total ReturnE | 33.57% | (14.01)% | 7.69% | 24.31% | 23.92% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .94% | .90% | .88% | .85% | .89% |
| Expenses net of fee waivers, if any | .94% | .89% | .88% | .85% | .89% |
| Expenses net of all reductions | .93% | .89% | .88% | .83% | .86% |
| Net investment income (loss) | 1.72% | 1.53% | 1.45% | 2.07% | 1.98% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $101,823 | $86,643 | $134,569 | $250,222 | $303,556 |
| Portfolio turnover rateH | 44% | 48% | 71% | 89% | 79% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $3.32 per share is comprised of distributions from net investment income of $.296 and distributions from net realized gain of $3.026 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Financial Services Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Financial Services Portfolio | 38.78% | 13.85% | 0.51% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Financial Services Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $10,523 | Financial Services Portfolio | |
| $20,834 | S&P 500® Index | |
Financial Services Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Christopher Lee: For the year, the fund returned 38.78%, which lagged the 46.39% return of the MSCI U.S. IMI Financials 5% Capped Linked Index but beat the S&P 500®. The fund’s bias toward higher-quality companies with more-stable earnings growth hindered performance versus the MSCI industry index, as lower-quality and more-economically sensitive stocks outperformed. Disappointing picks in the data processing & outsourced services group, which is not in the MSCI index, and positioning in the investment banking & brokerage segment detracted the most from relative performance. Individual disappointments included credit-card processor Visa, which was hindered by the shift toward more U.S.-focused, interest rate-sensitive financials. A tiny stake in tax preparer H&R Block also hurt, as aggressive pricing from competitors led to declining volumes and a worse-than-expected market share loss for the 2016 tax season. Neither Visa nor H&R Block was in the MSCI index, and H&R Block was not held at period end. By contrast, picks within the diversified banks group helped relative performance. However, the top individual contributor was Ohio-based regional bank Huntington Bancshares, which gained from prospects of looser U.S. regulations, the expectation of higher U.S. interest rates and a recent acquisition.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Notes to shareholders: On September 1, 2016, real estate became recognized as a standalone sector under the S&P and MSCI Global Industry Classification Standard, the basis for many equity-market indices. With this change, the structure of the fund’s supplemental sector benchmark was modified to exclude real estate as an industry group, with the exception of mortgage-related REITs. Additionally on September 1, 2016, the fund’s sector benchmark changed to the MSCI U.S. IMI Financials 5% Capped Linked Index. This capped index precludes any single issuer from representing more than 5% of the index at the time of quarterly rebalance.Financial Services Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Berkshire Hathaway, Inc. Class B | 6.0 | 6.4 |
| Capital One Financial Corp. | 5.3 | 3.0 |
| Bank of America Corp. | 5.1 | 4.8 |
| Citigroup, Inc. | 5.0 | 4.9 |
| Wells Fargo & Co. | 5.0 | 3.8 |
| Goldman Sachs Group, Inc. | 4.9 | 2.7 |
| U.S. Bancorp | 3.6 | 4.2 |
| JPMorgan Chase & Co. | 3.5 | 3.4 |
| Huntington Bancshares, Inc. | 3.4 | 2.2 |
| American International Group, Inc. | 3.2 | 2.4 |
| 45.0 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Banks | 38.1% | |
| Insurance | 20.1% | |
| Capital Markets | 19.9% | |
| Consumer Finance | 10.1% | |
| Diversified Financial Services | 6.5% | |
| All Others* | 5.3% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Banks | 31.4% | |
| Insurance | 24.0% | |
| Diversified Financial Services | 10.9% | |
| Capital Markets | 10.0% | |
| Real Estate Investment Trusts | 6.8% | |
| All Others* | 16.9% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Financial Services Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 97.8% | |||
| Shares | Value | ||
| Banks - 38.1% | |||
| Diversified Banks - 22.6% | |||
| Bank of America Corp. | 2,136,700 | $52,733,756 | |
| Citigroup, Inc. | 850,000 | 50,838,500 | |
| Comerica, Inc. | 55,000 | 3,920,400 | |
| JPMorgan Chase & Co. | 394,200 | 35,722,404 | |
| U.S. Bancorp | 667,100 | 36,690,500 | |
| Wells Fargo & Co. | 877,300 | 50,778,124 | |
| 230,683,684 | |||
| Regional Banks - 15.5% | |||
| Bank of the Ozarks, Inc. | 250,000 | 13,682,500 | |
| CIT Group, Inc. | 325,000 | 13,942,500 | |
| CoBiz, Inc. | 350,000 | 5,967,500 | |
| First Republic Bank | 177,700 | 16,673,591 | |
| Huntington Bancshares, Inc. | 2,463,100 | 34,828,234 | |
| M&T Bank Corp. | 90,000 | 15,027,300 | |
| PNC Financial Services Group, Inc. | 250,000 | 31,807,500 | |
| Popular, Inc. | 250,000 | 11,015,000 | |
| Preferred Bank, Los Angeles | 40,000 | 2,245,600 | |
| SVB Financial Group (a) | 65,000 | 12,407,850 | |
| 157,597,575 | |||
| TOTAL BANKS | 388,281,259 | ||
| Capital Markets - 19.9% | |||
| Asset Management & Custody Banks - 7.8% | |||
| Affiliated Managers Group, Inc. | 77,800 | 13,064,954 | |
| Ameriprise Financial, Inc. | 90,000 | 11,835,000 | |
| BlackRock, Inc. Class A | 64,000 | 24,797,440 | |
| Northern Trust Corp. | 242,700 | 21,199,845 | |
| Oaktree Capital Group LLC Class A | 200,000 | 8,940,000 | |
| 79,837,239 | |||
| Financial Exchanges & Data - 3.9% | |||
| CBOE Holdings, Inc. | 185,000 | 14,439,250 | |
| IntercontinentalExchange, Inc. | 450,000 | 25,708,500 | |
| 40,147,750 | |||
| Investment Banking & Brokerage - 8.2% | |||
| E*TRADE Financial Corp. (a) | 400,000 | 13,804,000 | |
| Goldman Sachs Group, Inc. | 202,100 | 50,132,926 | |
| Investment Technology Group, Inc. | 250,000 | 5,005,000 | |
| TD Ameritrade Holding Corp. | 370,000 | 14,467,000 | |
| 83,408,926 | |||
| TOTAL CAPITAL MARKETS | 203,393,915 | ||
| Consumer Finance - 10.1% | |||
| Consumer Finance - 10.1% | |||
| Capital One Financial Corp. | 580,000 | 54,438,800 | |
| Discover Financial Services | 303,400 | 21,583,876 | |
| Synchrony Financial | 755,700 | 27,386,568 | |
| 103,409,244 | |||
| Diversified Financial Services - 6.5% | |||
| Multi-Sector Holdings - 6.0% | |||
| Berkshire Hathaway, Inc. Class B (a) | 355,000 | 60,854,100 | |
| Specialized Finance - 0.5% | |||
| Bats Global Markets, Inc. | 150,000 | 5,269,500 | |
| TOTAL DIVERSIFIED FINANCIAL SERVICES | 66,123,600 | ||
| Insurance - 20.1% | |||
| Insurance Brokers - 2.0% | |||
| Brown & Brown, Inc. | 100,000 | 4,310,000 | |
| Willis Group Holdings PLC | 125,000 | 16,053,750 | |
| 20,363,750 | |||
| Life & Health Insurance - 2.0% | |||
| Torchmark Corp. | 264,300 | 20,491,179 | |
| Multi-Line Insurance - 4.2% | |||
| American Financial Group, Inc. | 115,000 | 10,816,900 | |
| American International Group, Inc. | 507,400 | 32,433,008 | |
| 43,249,908 | |||
| Property & Casualty Insurance - 10.7% | |||
| Allied World Assurance Co. Holdings AG | 75,000 | 3,961,500 | |
| Allstate Corp. | 278,100 | 22,848,696 | |
| AmTrust Financial Services, Inc. | 225,000 | 5,175,000 | |
| Chubb Ltd. | 215,600 | 29,789,452 | |
| FNF Group | 500,000 | 19,165,000 | |
| The Travelers Companies, Inc. | 229,300 | 28,029,632 | |
| 108,969,280 | |||
| Reinsurance - 1.2% | |||
| Reinsurance Group of America, Inc. | 90,000 | 11,705,400 | |
| TOTAL INSURANCE | 204,779,517 | ||
| IT Services - 2.1% | |||
| Data Processing & Outsourced Services - 2.1% | |||
| Visa, Inc. Class A | 180,000 | 15,829,200 | |
| WEX, Inc. (a) | 50,000 | 5,561,500 | |
| 21,390,700 | |||
| Mortgage Real Estate Investment Trusts - 0.3% | |||
| Mortgage REITs - 0.3% | |||
| American Capital Mortgage Investment Corp. | 175,000 | 2,896,250 | |
| Thrifts & Mortgage Finance - 0.7% | |||
| Thrifts & Mortgage Finance - 0.7% | |||
| MGIC Investment Corp. (a) | 369,800 | 3,938,370 | |
| Radian Group, Inc. | 155,900 | 2,901,299 | |
| 6,839,669 | |||
| TOTAL COMMON STOCKS | |||
| (Cost $794,889,246) | 997,114,154 | ||
| Money Market Funds - 2.5% | |||
| Fidelity Cash Central Fund, 0.60% (b) | |||
| (Cost $25,120,818) | 25,115,794 | 25,120,818 | |
| TOTAL INVESTMENT PORTFOLIO - 100.3% | |||
| (Cost $820,010,064) | 1,022,234,972 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.3)% | (2,579,268) | ||
| NET ASSETS - 100% | $1,019,655,704 |
Legend
(a) Non-income producing
(b) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $149,707 |
| Fidelity Securities Lending Cash Central Fund | 7,652 |
| Total | $157,359 |
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Financial Services Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value — See accompanying schedule: Unaffiliated issuers (cost $794,889,246) | $997,114,154 | |
| Fidelity Central Funds (cost $25,120,818) | 25,120,818 | |
| Total Investments (cost $820,010,064) | $1,022,234,972 | |
| Receivable for fund shares sold | 2,714,138 | |
| Dividends receivable | 667,055 | |
| Distributions receivable from Fidelity Central Funds | 10,782 | |
| Prepaid expenses | 3,872 | |
| Other receivables | 8,814 | |
| Total assets | 1,025,639,633 | |
| Liabilities | ||
| Payable for investments purchased | $4,145,887 | |
| Payable for fund shares redeemed | 1,172,540 | |
| Accrued management fee | 453,282 | |
| Other affiliated payables | 173,016 | |
| Other payables and accrued expenses | 39,204 | |
| Total liabilities | 5,983,929 | |
| Net Assets | $1,019,655,704 | |
| Net Assets consist of: | ||
| Paid in capital | $805,888,430 | |
| Undistributed net investment income | 425,415 | |
| Accumulated undistributed net realized gain (loss) on investments | 11,117,799 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 202,224,060 | |
| Net Assets, for 9,894,402 shares outstanding | $1,019,655,704 | |
| Net Asset Value, offering price and redemption price per share ($1,019,655,704 ÷ 9,894,402 shares) | $103.05 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $18,819,507 | |
| Income from Fidelity Central Funds | 157,359 | |
| Total income | 18,976,866 | |
| Expenses | ||
| Management fee | $5,571,663 | |
| Transfer agent fees | 1,739,157 | |
| Accounting and security lending fees | 337,203 | |
| Custodian fees and expenses | 28,807 | |
| Independent trustees' fees and expenses | 22,561 | |
| Registration fees | 56,547 | |
| Audit | 42,660 | |
| Legal | 17,091 | |
| Miscellaneous | 15,280 | |
| Total expenses before reductions | 7,830,969 | |
| Expense reductions | (63,154) | 7,767,815 |
| Net investment income (loss) | 11,209,051 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 33,149,197 | |
| Redemptions in-kind with affiliated entities | 46,242,607 | |
| Fidelity Central Funds | (903) | |
| Total net realized gain (loss) | 79,390,901 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 210,318,239 | |
| Assets and liabilities in foreign currencies | 36 | |
| Total change in net unrealized appreciation (depreciation) | 210,318,275 | |
| Net gain (loss) | 289,709,176 | |
| Net increase (decrease) in net assets resulting from operations | $300,918,227 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $11,209,051 | $13,225,895 |
| Net realized gain (loss) | 79,390,901 | (8,799,239) |
| Change in net unrealized appreciation (depreciation) | 210,318,275 | (195,194,502) |
| Net increase (decrease) in net assets resulting from operations | 300,918,227 | (190,767,846) |
| Distributions to shareholders from net investment income | (9,666,149) | (11,432,858) |
| Distributions to shareholders from net realized gain | – | (8,681,321) |
| Total distributions | (9,666,149) | (20,114,179) |
| Share transactions | ||
| Proceeds from sales of shares | 369,367,686 | 127,816,905 |
| Reinvestment of distributions | 9,404,400 | 19,783,396 |
| Cost of shares redeemed | (693,953,459) | (278,642,814) |
| Net increase (decrease) in net assets resulting from share transactions | (315,181,373) | (131,042,513) |
| Redemption fees | 11,423 | 8,557 |
| Total increase (decrease) in net assets | (23,917,872) | (341,915,981) |
| Net Assets | ||
| Beginning of period | 1,043,573,576 | 1,385,489,557 |
| End of period | $1,019,655,704 | $1,043,573,576 |
| Other Information | ||
| Undistributed net investment income end of period | $425,415 | $– |
| Distributions in excess of net investment income end of period | $– | $(1,045,722) |
| Shares | ||
| Sold | 3,895,979 | 1,462,721 |
| Issued in reinvestment of distributions | 95,090 | 239,886 |
| Redeemed | (8,010,907) | (3,384,258) |
| Net increase (decrease) | (4,019,838) | (1,681,651) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Financial Services Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $75.00 | $88.84 | $80.90 | $65.56 | $57.57 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .95 | .87 | .84 | 1.06 | .99 |
| Net realized and unrealized gain (loss) | 28.09 | (13.34) | 8.75 | 15.03 | 7.75 |
| Total from investment operations | 29.04 | (12.47) | 9.59 | 16.09 | 8.74 |
| Distributions from net investment income | (.99) | (.78) | (.89) | (.75) | (.75) |
| Distributions from net realized gain | – | (.59) | (.76) | – | – |
| Total distributions | (.99) | (1.37) | (1.65) | (.75) | (.75) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $103.05 | $75.00 | $88.84 | $80.90 | $65.56 |
| Total ReturnD | 38.78% | (14.18)% | 11.87% | 24.56% | 15.26% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .77% | .76% | .78% | .83% | .87% |
| Expenses net of fee waivers, if any | .77% | .76% | .78% | .83% | .87% |
| Expenses net of all reductions | .76% | .75% | .78% | .81% | .78% |
| Net investment income (loss) | 1.10% | 1.01% | .99% | 1.43% | 1.66% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $1,019,656 | $1,043,574 | $1,385,490 | $779,524 | $616,059 |
| Portfolio turnover rateG | 84%H | 55% | 42%H | 197% | 271% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
H Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Insurance Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Insurance Portfolio | 31.60% | 17.52% | 5.63% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Insurance Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $17,299 | Insurance Portfolio | |
| $20,834 | S&P 500® Index | |
Insurance Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Peter Deutsch: For the year, the fund returned 31.60%, trailing the 32.84% advance of the MSCI U.S. IMI Insurance 25/50 Index but beating the broad-based S&P 500®. The strategic use of cash hindered relative performance, as post-election expectations of higher interest rates, looser regulation and lower corporate tax rates fueled the industry index’s strong advance. Security selection and segment allocations helped performance versus the industry index, with the biggest boost coming from the property & casualty (P&C) insurance group. Top individual contributors included life insurer Principal Financial Group, which benefited from strong asset inflows, positive investment performance and the delayed implementation of new fiduciary regulations. An investment in small-cap alternative asset manager Ares Management, which is not in the MSCI industry index, rose as credit risk subsided. Shares of Switzerland-based P&C insurer Allied World Assurance Company Holdings gained from improved market conditions and a generous buyout offer. By contrast, picks in multi-line insurance and the multi-sector holdings group nicked relative performance. In terms of individual disappointments, having sizable underweightings in life insurers Lincoln National and Prudential Financial hurt, as both stocks rose sharply.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Insurance Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Chubb Ltd. | 10.0 | 10.3 |
| American International Group, Inc. | 10.0 | 11.3 |
| MetLife, Inc. | 6.5 | 6.1 |
| The Travelers Companies, Inc. | 5.9 | 5.0 |
| Prudential Financial, Inc. | 5.9 | 4.7 |
| Marsh & McLennan Companies, Inc. | 5.3 | 5.5 |
| AFLAC, Inc. | 4.5 | 5.2 |
| Allstate Corp. | 4.2 | 4.0 |
| Principal Financial Group, Inc. | 3.9 | 3.6 |
| Aon PLC | 3.4 | 3.6 |
| 59.6 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Insurance | 92.5% | |
| Diversified Financial Services | 3.0% | |
| Capital Markets | 1.2% | |
| Banks | 0.3% | |
| Consumer Finance | 0.1% | |
| All Others* | 2.9% | |
* Includes Short-Term Investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Insurance | 90.6% | |
| Diversified Financial Services | 2.9% | |
| Capital Markets | 1.2% | |
| Banks | 0.2% | |
| Consumer Finance | 0.2% | |
| All Others* | 4.9% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Insurance Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 97.1% | |||
| Shares | Value | ||
| Banks - 0.3% | |||
| Regional Banks - 0.3% | |||
| Hilltop Holdings, Inc. | 500 | $14,190 | |
| Huntington Bancshares, Inc. | 122,700 | 1,734,978 | |
| 1,749,168 | |||
| Capital Markets - 1.2% | |||
| Asset Management & Custody Banks - 1.2% | |||
| Apollo Global Management LLC Class A | 148,444 | 3,375,617 | |
| Ares Management LP | 208,614 | 4,506,062 | |
| 7,881,679 | |||
| Consumer Finance - 0.1% | |||
| Consumer Finance - 0.1% | |||
| J.G. Wentworth Co. (a)(b) | 179,100 | 69,849 | |
| OneMain Holdings, Inc. (a) | 29,000 | 812,580 | |
| 882,429 | |||
| Diversified Financial Services - 3.0% | |||
| Multi-Sector Holdings - 2.6% | |||
| Berkshire Hathaway, Inc. Class B (a) | 98,100 | 16,816,302 | |
| Other Diversified Financial Services - 0.4% | |||
| Voya Financial, Inc. | 60,900 | 2,510,907 | |
| TOTAL DIVERSIFIED FINANCIAL SERVICES | 19,327,209 | ||
| Insurance - 92.5% | |||
| Insurance Brokers - 14.1% | |||
| Aon PLC | 188,500 | 21,800,025 | |
| Arthur J. Gallagher & Co. | 211,400 | 12,039,230 | |
| Brown & Brown, Inc. | 269,900 | 11,632,690 | |
| Marsh & McLennan Companies, Inc. | 469,900 | 34,528,252 | |
| Willis Group Holdings PLC | 90,728 | 11,652,197 | |
| 91,652,394 | |||
| Life & Health Insurance - 27.2% | |||
| AFLAC, Inc. | 405,700 | 29,352,395 | |
| CNO Financial Group, Inc. | 235,300 | 4,920,123 | |
| FBL Financial Group, Inc. Class A | 300 | 20,505 | |
| Genworth Financial, Inc. Class A (a) | 444,100 | 1,816,369 | |
| Lincoln National Corp. | 10,900 | 764,744 | |
| MetLife, Inc. | 808,675 | 42,406,917 | |
| Primerica, Inc. | 49,100 | 3,964,825 | |
| Principal Financial Group, Inc. | 406,200 | 25,403,748 | |
| Prudential Financial, Inc. | 344,689 | 38,101,922 | |
| Sony Financial Holdings, Inc. | 286,000 | 5,025,270 | |
| Torchmark Corp. | 121,400 | 9,412,142 | |
| Unum Group | 307,061 | 14,993,789 | |
| 176,182,749 | |||
| Multi-Line Insurance - 13.7% | |||
| American International Group, Inc. | 1,011,000 | 64,623,120 | |
| Assurant, Inc. | 38,100 | 3,771,900 | |
| Hartford Financial Services Group, Inc. | 281,300 | 13,752,757 | |
| Loews Corp. | 114,100 | 5,360,418 | |
| Zurich Insurance Group AG | 3,616 | 997,919 | |
| 88,506,114 | |||
| Property & Casualty Insurance - 33.1% | |||
| Allied World Assurance Co. Holdings AG | 268,400 | 14,176,888 | |
| Allstate Corp. | 333,200 | 27,375,712 | |
| AmTrust Financial Services, Inc. | 72,400 | 1,665,200 | |
| Arch Capital Group Ltd. (a) | 76,000 | 7,187,320 | |
| Argo Group International Holdings, Ltd. | 16,681 | 1,116,793 | |
| Aspen Insurance Holdings Ltd. | 78,500 | 4,399,925 | |
| Assured Guaranty Ltd. | 115,200 | 4,735,872 | |
| Axis Capital Holdings Ltd. | 14,800 | 1,025,640 | |
| Beazley PLC | 20,596 | 110,915 | |
| Chubb Ltd. | 468,605 | 64,747,153 | |
| Employers Holdings, Inc. | 800 | 30,080 | |
| esure Group PLC | 174,900 | 463,999 | |
| First American Financial Corp. | 69,100 | 2,699,737 | |
| FNF Group | 122,800 | 4,706,924 | |
| FNFV Group (a) | 21,299 | 265,173 | |
| Hanover Insurance Group, Inc. | 43,900 | 3,951,878 | |
| Hiscox Ltd. | 139,220 | 1,876,077 | |
| Markel Corp. (a) | 9,800 | 9,601,354 | |
| MBIA, Inc. (a) | 92,900 | 958,728 | |
| Mercury General Corp. | 200 | 11,726 | |
| OneBeacon Insurance Group Ltd. | 112,200 | 1,831,104 | |
| Progressive Corp. | 212,000 | 8,306,160 | |
| Selective Insurance Group, Inc. | 23,900 | 1,058,770 | |
| The Travelers Companies, Inc. | 315,600 | 38,578,944 | |
| W.R. Berkley Corp. | 24,200 | 1,718,684 | |
| White Mountains Insurance Group Ltd. | 260 | 243,428 | |
| XL Group Ltd. | 281,200 | 11,385,788 | |
| 214,229,972 | |||
| Reinsurance - 4.4% | |||
| Alleghany Corp. (a) | 4,025 | 2,599,345 | |
| Endurance Specialty Holdings Ltd. | 85,300 | 7,926,929 | |
| Everest Re Group Ltd. | 3,200 | 752,448 | |
| Maiden Holdings Ltd. | 700 | 10,815 | |
| Muenchener Rueckversicherungs AG | 8,100 | 1,530,875 | |
| Reinsurance Group of America, Inc. | 93,733 | 12,190,914 | |
| Third Point Reinsurance Ltd. (a) | 46,300 | 574,120 | |
| Validus Holdings Ltd. | 48,900 | 2,819,574 | |
| 28,405,020 | |||
| TOTAL INSURANCE | 598,976,249 | ||
| IT Services - 0.0% | |||
| Data Processing & Outsourced Services - 0.0% | |||
| Gocompare.com Group PLC (a) | 174,900 | 207,259 | |
| TOTAL COMMON STOCKS | |||
| (Cost $425,696,877) | 629,023,993 | ||
| Nonconvertible Preferred Stocks - 0.0% | |||
| Insurance - 0.0% | |||
| Life & Health Insurance - 0.0% | |||
| Torchmark Corp. 6.125% | |||
| (Cost $76,079) | 3,059 | 78,463 | |
| Money Market Funds - 3.1% | |||
| Fidelity Cash Central Fund, 0.60% (c) | 19,700,754 | 19,704,694 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (c)(d) | 12,399 | 12,401 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $19,715,404) | 19,717,095 | ||
| TOTAL INVESTMENT PORTFOLIO - 100.2% | |||
| (Cost $445,488,360) | 648,819,551 | ||
| NET OTHER ASSETS (LIABILITIES) - (0.2)% | (1,032,409) | ||
| NET ASSETS - 100% | $647,787,142 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(d) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $136,518 |
| Fidelity Securities Lending Cash Central Fund | 3,146 |
| Total | $139,664 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $629,023,993 | $628,026,074 | $997,919 | $-- |
| Nonconvertible Preferred Stocks | 78,463 | 78,463 | -- | -- |
| Money Market Funds | 19,717,095 | 19,717,095 | -- | -- |
| Total Investments in Securities: | $648,819,551 | $647,821,632 | $997,919 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 75.9% |
| Switzerland | 12.4% |
| Bermuda | 7.1% |
| United Kingdom | 3.5% |
| Others (Individually Less Than 1%) | 1.1% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Insurance Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $4,836) — See accompanying schedule: Unaffiliated issuers (cost $425,772,956) | $629,102,456 | |
| Fidelity Central Funds (cost $19,715,404) | 19,717,095 | |
| Total Investments (cost $445,488,360) | $648,819,551 | |
| Receivable for fund shares sold | 767,073 | |
| Dividends receivable | 994,550 | |
| Distributions receivable from Fidelity Central Funds | 10,158 | |
| Prepaid expenses | 1,972 | |
| Other receivables | 656 | |
| Total assets | 650,593,960 | |
| Liabilities | ||
| Payable for fund shares redeemed | $2,343,605 | |
| Accrued management fee | 295,828 | |
| Other affiliated payables | 120,337 | |
| Other payables and accrued expenses | 34,648 | |
| Collateral on securities loaned | 12,400 | |
| Total liabilities | 2,806,818 | |
| Net Assets | $647,787,142 | |
| Net Assets consist of: | ||
| Paid in capital | $442,675,445 | |
| Undistributed net investment income | 985,204 | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | 795,904 | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 203,330,589 | |
| Net Assets, for 8,037,174 shares outstanding | $647,787,142 | |
| Net Asset Value, offering price and redemption price per share ($647,787,142 ÷ 8,037,174 shares) | $80.60 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $12,306,091 | |
| Income from Fidelity Central Funds | 139,664 | |
| Total income | 12,445,755 | |
| Expenses | ||
| Management fee | $3,152,165 | |
| Transfer agent fees | 1,073,979 | |
| Accounting and security lending fees | 215,354 | |
| Custodian fees and expenses | 9,242 | |
| Independent trustees' fees and expenses | 12,365 | |
| Registration fees | 45,420 | |
| Audit | 42,148 | |
| Legal | 8,034 | |
| Miscellaneous | 6,207 | |
| Total expenses before reductions | 4,564,914 | |
| Expense reductions | (8,233) | 4,556,681 |
| Net investment income (loss) | 7,889,074 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 4,121,061 | |
| Fidelity Central Funds | 4,014 | |
| Foreign currency transactions | 4,425 | |
| Total net realized gain (loss) | 4,129,500 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 143,125,351 | |
| Assets and liabilities in foreign currencies | (578) | |
| Total change in net unrealized appreciation (depreciation) | 143,124,773 | |
| Net gain (loss) | 147,254,273 | |
| Net increase (decrease) in net assets resulting from operations | $155,143,347 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $7,889,074 | $5,848,487 |
| Net realized gain (loss) | 4,129,500 | 16,002,493 |
| Change in net unrealized appreciation (depreciation) | 143,124,773 | (40,489,080) |
| Net increase (decrease) in net assets resulting from operations | 155,143,347 | (18,638,100) |
| Distributions to shareholders from net investment income | (7,613,475) | (5,125,338) |
| Distributions to shareholders from net realized gain | (9,708,827) | (9,186,244) |
| Total distributions | (17,322,302) | (14,311,582) |
| Share transactions | ||
| Proceeds from sales of shares | 240,670,672 | 203,320,374 |
| Reinvestment of distributions | 16,799,725 | 13,796,466 |
| Cost of shares redeemed | (207,368,304) | (126,141,777) |
| Net increase (decrease) in net assets resulting from share transactions | 50,102,093 | 90,975,063 |
| Redemption fees | 9,719 | 10,703 |
| Total increase (decrease) in net assets | 187,932,857 | 58,036,084 |
| Net Assets | ||
| Beginning of period | 459,854,285 | 401,818,201 |
| End of period | $647,787,142 | $459,854,285 |
| Other Information | ||
| Undistributed net investment income end of period | $985,204 | $1,074,249 |
| Shares | ||
| Sold | 3,320,634 | 2,959,417 |
| Issued in reinvestment of distributions | 236,373 | 208,292 |
| Redeemed | (2,802,254) | (1,894,230) |
| Net increase (decrease) | 754,753 | 1,273,479 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Insurance Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $63.15 | $66.87 | $66.08 | $56.81 | $47.56 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .99 | .89 | .96 | .75 | .68 |
| Net realized and unrealized gain (loss) | 18.64 | (2.50) | 7.13 | 13.75 | 10.06 |
| Total from investment operations | 19.63 | (1.61) | 8.09 | 14.50 | 10.74 |
| Distributions from net investment income | (.89) | (.74) | (.96) | (.61) | (.52) |
| Distributions from net realized gain | (1.29) | (1.37) | (6.34) | (4.62) | (.97) |
| Total distributions | (2.18) | (2.11) | (7.30) | (5.23) | (1.49) |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $80.60 | $63.15 | $66.87 | $66.08 | $56.81 |
| Total ReturnD | 31.60% | (2.54)% | 13.01% | 25.82% | 22.91% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .80% | .80% | .81% | .83% | .87% |
| Expenses net of fee waivers, if any | .79% | .80% | .81% | .83% | .87% |
| Expenses net of all reductions | .79% | .80% | .81% | .82% | .85% |
| Net investment income (loss) | 1.37% | 1.32% | 1.44% | 1.17% | 1.35% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $647,787 | $459,854 | $401,818 | $430,482 | $307,071 |
| Portfolio turnover rateG | 16% | 25% | 26% | 126% | 157% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2017
1. Organization.
Banking Portfolio, Brokerage and Investment Management Portfolio, Consumer Finance Portfolio, Financial Services Portfolio, and Insurance Portfolio (the Funds) are funds of Fidelity Select Portfolios (the Trust). The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds are non-diversified with the exception of Financial Services Portfolio and Banking Portfolio. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Share transactions on the Statement of Changes in Net Assets may contain exchanges between affiliated funds.
2. Investments in Fidelity Central Funds.
The Funds invest in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but does not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of each Fund's investments to the Fair Value Committee (the Committee) established by each Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, each Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees each Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing each Fund's investments and ratifies the fair value determinations of the Committee.
Each Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 28, 2017 is included at the end of applicable Fund's Schedule of Investments.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Funds represent a return of capital or capital gain. The Funds determine the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for Brokerage and Investment Management Portfolio, independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2017, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. Each Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, certain Funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, equity-debt classifications, redemptions in kind, partnerships, deferred trustees' compensation, capital loss carryforwards, expiring capital loss carryforwards, and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) on securities | |
| Banking Portfolio | $964,750,488 | $301,782,125 | $(3,953,201) | $297,828,924 |
| Brokerage and Investment Management Portfolio | 355,011,100 | 62,743,704 | (6,544,198) | 56,199,506 |
| Consumer Finance Portfolio | 82,703,103 | 26,988,057 | (1,211,443) | 25,776,614 |
| Financial Services Portfolio | 822,606,605 | 203,573,972 | (3,945,605) | 199,628,367 |
| Insurance Portfolio | 447,062,760 | 203,260,465 | (1,503,674) | 201,756,791 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed ordinary income | Undistributed long-term capital gain | Capital loss carryforward | Net unrealized appreciation (depreciation) on securities and other investments | |
| Banking Portfolio | $152,031 | $– | $(16,103,640) | $297,847,445 |
| Brokerage and Investment Management Portfolio | 106,818 | 6,870,558 | – | 56,199,506 |
| Consumer Finance Portfolio | 99,677 | – | (11,669,464) | 25,776,614 |
| Financial Services Portfolio | 425,614 | 13,714,340 | – | 199,627,519 |
| Insurance Portfolio | 1,154,036 | 2,201,487 | – | 201,756,189 |
Capital loss carryforwards are only available to offset future capital gains of the Funds to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| Fiscal year of expiration | |||
| 2018 | 2019 | Total with expiration | |
| Consumer Finance Portfolio | $(10,657,800) | $(1,011,664) | $(11,669,464) |
| No expiration | ||||
| Short-term | Long-term | Total no expiration | Total capital loss carryforward | |
| Banking Portfolio | $(11,016,532) | $(5,087,108) | $(16,103,640) | $(16,103,640) |
| Consumer Finance Portfolio | – | – | – | (11,669,464) |
Due to large subscriptions in a prior period, $11,669,464 of capital losses that will be available to offset future capital gains of the Consumer Finance Portfolio will be limited to approximately $5,418,625 per year.
The tax character of distributions paid was as follows:
| February 28, 2017 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Banking Portfolio | $7,718,086 | $– | $7,718,086 |
| Brokerage and Investment Management Portfolio | 4,455,060 | – | 4,455,060 |
| Consumer Finance Portfolio | 1,693,811 | 2,140,248 | 3,834,059 |
| Financial Services Portfolio | 9,666,149 | – | 9,666,149 |
| Insurance Portfolio | 7,613,475 | 9,708,827 | 17,322,302 |
| February 29, 2016 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Banking Portfolio | $9,401,634 | $25,942,663 | $35,344,297 |
| Brokerage and Investment Management Portfolio | 4,622,816 | 21,141,799 | 25,764,615 |
| Consumer Finance Portfolio | 1,629,098 | 9,545,636 | 11,174,734 |
| Financial Services Portfolio | 11,432,858 | 8,681,321 | 20,114,179 |
| Insurance Portfolio | 5,262,347 | 9,049,235 | 14,311,582 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital. In November 2016, the Board of Trustees approved the elimination of these redemption fees for Financial Services Portfolio effective December 12, 2016.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, are noted in the table below.
| Purchases ($) | Sales ($) | |
| Banking Portfolio | 610,562,759 | 249,185,645 |
| Brokerage and Investment Management Portfolio | 493,195,606 | 479,199,675 |
| Consumer Finance Portfolio | 40,426,596 | 50,026,226 |
| Financial Services Portfolio | 826,884,052 | 825,798,294 |
| Insurance Portfolio | 137,393,331 | 88,459,989 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total | |
| Banking Portfolio | .30% | .25% | .55% |
| Brokerage and Investment Management Portfolio | .30% | .25% | .55% |
| Consumer Finance Portfolio | .30% | .25% | .55% |
| Financial Services Portfolio | .30% | .25% | .55% |
| Insurance Portfolio | .30% | .25% | .55% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
| Banking Portfolio | .18% |
| Brokerage and Investment Management Portfolio | .20% |
| Consumer Finance Portfolio | .26% |
| Financial Services Portfolio | .17% |
| Insurance Portfolio | .19% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Banking Portfolio | $14,665 |
| Brokerage and Investment Management Portfolio | 25,066 |
| Consumer Finance Portfolio | 2,059 |
| Financial Services Portfolio | 23,786 |
| Insurance Portfolio | 2,568 |
Interfund Trades. The Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Redemptions In-Kind. During the period, 3,248,246 shares of Financial Services Portfolio held by an affiliated entity were redeemed in-kind for investments and cash with a value of $276,003,424. The net realized gain of $46,242,607 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. Financial Services Portfolio recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
| Banking Portfolio | $1,989 |
| Brokerage and Investment Management Portfolio | 991 |
| Consumer Finance Portfolio | 275 |
| Financial Services Portfolio | 3,142 |
| Insurance Portfolio | 1,663 |
During the period, the Funds did not borrow on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. The Funds or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Funds may apply collateral received from the borrower against the obligation. The Funds may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds. Security lending activity was as follows:
| Total Security Lending Income | |
| Banking Portfolio | $17,959 |
| Brokerage and Investment Management Portfolio | 54,281 |
| Consumer Finance Portfolio | 95,620 |
| Financial Services Portfolio | 7,652 |
| Insurance Portfolio | 3,146 |
8. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of Certain Funds include an amount in addition to trade execution, which may be rebated back to the Funds to offset certain expenses. In addition, through arrangements with each applicable Fund's custodian, credits realized as a result of certain uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage Service reduction | Custody expense reduction | |
| Banking Portfolio | $52,376 | $– |
| Brokerage and Investment Management Portfolio | 40,562 | 191 |
| Consumer Finance Portfolio | 3,870 | – |
| Financial Services Portfolio | 53,701 | 133 |
| Insurance Portfolio | 3,010 | 48 |
In addition, during the period the investment adviser reimbursed and/or waived a portion of operating expenses as follows:
| Amount | |
| Banking Portfolio | $7,540 |
| Brokerage and Investment Management Portfolio | 3,302 |
| Consumer Finance Portfolio | 859 |
| Financial Services Portfolio | 9,320 |
| Insurance Portfolio | 5,175 |
9. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
At the end of the period, the following mutual funds managed by the investment adviser or its affiliates were the owners of record of 10% or more of the total outstanding shares of the following Funds.
| VIP FundsManager 50% Portfolio | VIP FundsManager 60% Portfolio | |
| Banking Portfolio | –% | 14% |
| Financial Services Portfolio | 16% | 21% |
| Insurance Portfolio | 12% | 13% |
Mutual funds managed by the investment adviser or its affiliates, in aggregate, were the owners of record of more than 20% of the total outstanding shares of the following Funds.
| % of shares held | |
| Banking Portfolio | 27% |
| Financial Services Portfolio | 45% |
| Insurance Portfolio | 31% |
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Banking Portfolio, Brokerage and Investment Management Portfolio, Consumer Finance Portfolio, Financial Services Portfolio and Insurance Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Banking Portfolio, Brokerage and Investment Management Portfolio, Consumer Finance Portfolio, Financial Services Portfolio and Insurance Portfolio (each a fund of Fidelity Select Portfolios) (the"Funds") as of February 28, 2017, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of February 28, 2017 by correspondence with the custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 17, 2017
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 90 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the funds is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Each fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
* Determined to be an "Interested Trustee" by virtue of, among other things, his or her affiliation with the trust or various entities under common control with SelectCo.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed the oil refining, drilling and marketing of petroleum products (including specialty petroleum products), recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present) and serves as its President and CEO. Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006. Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Trustee or Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006), and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue serves as a Member (2012-present) and Co-Chairman (2016-present) of the Board of Directors of United Way of New York, Member of the Board of Directors of NYC Leadership Academy (2012-present) and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services), Treasurer of United Way of New York (2012-2016), and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Carol B. Tomé (1957)
Year of Election or Appointment: 2017
Member of the Advisory Board
Ms. Tomé also serves as Trustee or Member of the Advisory Board of other Fidelity® funds. Ms. Tomé is Chief Financial Officer (2001-present) and Executive Vice President of Corporate Services (2007-present) of The Home Depot, Inc. (home improvement retailer) and a Director (2003-present) and Chair of the Audit Committee (2004-present) of United Parcel Service, Inc. (package delivery and supply chain management). Previously, Ms. Tomé served as Senior Vice President of Finance and Accounting/Treasurer (2000-2007) and Vice President and Treasurer (1995-2000) of The Home Depot, Inc. and Chair of the Board (2010-2012), Vice Chair of the Board (2009 and 2013), and a Director (2008-2013) of the Federal Reserve Bank of Atlanta. Ms. Tomé is also a director or trustee of many community and professional organizations.
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Interim Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (UK) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
Jeffrey S. Christian (1961)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Christian also serves as Assistant Treasurer of other funds. Mr. Christian is an employee of Fidelity Investments (2003-present).
William C. Coffey (1969)
Year of Election or Appointment: 2009
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Senior Vice President of Fidelity Management & Research Company (FMR) (investment adviser firm, 2016), Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of FMR (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
Colm A. Hogan (1973)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan is an employee of Fidelity Investments (2005-present). Mr. Colm A. Hogan is not related to Mr. Brian B. Hogan.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche (accounting firm, 2005-2013).
Renee Stagnone (1975)
Year of Election or Appointment: 2016
Assistant Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2016 to February 28, 2017).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line for a fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on a fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, each Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio-A | Beginning Account Value September 1, 2016 | Ending Account Value February 28, 2017 | Expenses Paid During Period-B September 1, 2016 to February 28, 2017 | |
| Banking Portfolio | .79% | |||
| Actual | $1,000.00 | $1,299.40 | $4.50 | |
| Hypothetical-C | $1,000.00 | $1,020.88 | $3.96 | |
| Brokerage and Investment Management Portfolio | .81% | |||
| Actual | $1,000.00 | $1,167.10 | $4.35 | |
| Hypothetical-C | $1,000.00 | $1,020.78 | $4.06 | |
| Consumer Finance Portfolio | .93% | |||
| Actual | $1,000.00 | $1,154.60 | $4.97 | |
| Hypothetical-C | $1,000.00 | $1,020.18 | $4.66 | |
| Financial Services Portfolio | .78% | |||
| Actual | $1,000.00 | $1,205.40 | $4.27 | |
| Hypothetical-C | $1,000.00 | $1,020.93 | $3.91 | |
| Insurance Portfolio | .79% | |||
| Actual | $1,000.00 | $1,140.40 | $4.19 | |
| Hypothetical-C | $1,000.00 | $1,020.88 | $3.96 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities, and dividends derived from net investment income:
| Pay Date | Record Date | Dividends | Capital Gains | |
| Banking Portfolio | 04/10/17 | 04/07/17 | $0.006 | $0.000 |
| Brokerage and Investment Management Portfolio | 04/10/17 | 04/07/17 | $0.020 | $1.225 |
| Consumer Finance Portfolio | 04/10/17 | 04/07/17 | $0.016 | $0.000 |
| Financial Services Portfolio | 04/10/17 | 04/07/17 | $0.044 | $1.417 |
| Insurance Portfolio | 04/10/17 | 04/07/17 | $0.131 | $0.317 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2017, or, if subsequently determined to be different, the net capital gain of such year.
| Brokerage and Investment Management Portfolio | $7,014,607 |
| Financial Services Portfolio | $14,280,621 |
| Insurance Portfolio | $2,867,774 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 2016 | December 2016 | |
| Banking Portfolio | – | 100% |
| Brokerage and Investment Management Portfolio | – | 100% |
| Consumer Finance Portfolio | 94% | 50% |
| Financial Services Portfolio | – | 100% |
| Insurance Portfolio | 100% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| April 2016 | December 2016 | |
| Banking Portfolio | – | 100% |
| Brokerage and Investment Management Portfolio | – | 100% |
| Consumer Finance Portfolio | 54% | 50% |
| Financial Services Portfolio | – | 100% |
| Insurance Portfolio | 100% | 100% |
The funds will notify shareholders in January 2018 of amounts for use in preparing 2017 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Banking Portfolio
Brokerage and Investment Management Portfolio
Consumer Finance Portfolio
Financial Services Portfolio
Insurance Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. SelectCo and the sub-advisers are collectively referred to herein as the Investment Advisers. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2017 meeting, the Board unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of the Investment Advisers as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the investment personnel compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the Investment Advisers' investment staffs, including their size, education, experience, and resources, as well as Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board considered that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, compliance, and technology and operations capabilities and resources, which are integral parts of the investment management process.Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians, subcustodians, and pricing vendors; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs; (iv) broadening eligibility requirements for certain lower-priced share classes of, and streamlining the fee structure for, certain existing equity index funds; (v) lowering expense caps for certain existing funds and classes to reduce expenses paid by shareholders; (vi) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vii) rationalizing product lines and gaining increased efficiencies through fund mergers and share class consolidations; (viii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (ix) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; and (x) accelerating the conversion of all remaining Class B shares to Class A shares, which have a lower expense structure.Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.The Board took into account discussions with representatives of SelectCo about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Each of Banking Portfolio and Financial Services Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2016, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address each such fund's performance.In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing fund share classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors, including the following: general market conditions; issuer-specific information; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2016.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should continue to benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Banking Portfolio
Brokerage and Investment Management Portfolio
Consumer Finance Portfolio
Financial Services Portfolio
Insurance Portfolio
SELFIN-ANN-0417
1.813663.112
Fidelity® Select Portfolios® Energy Portfolio Energy Service Portfolio Natural Gas Portfolio Natural Resources Portfolio Annual Report February 28, 2017 |
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Contents
Energy Portfolio | |
Energy Service Portfolio | |
Natural Gas Portfolio | |
Natural Resources Portfolio | |
Board Approval of Investment Advisory Contracts and Management Fees |
To view a fund's proxy voting guidelines and proxy voting record for the 12-month period ended June 30, visit http://www.fidelity.com/proxyvotingresults or visit the Securities and Exchange Commission's (SEC) web site at http://www.sec.gov.
You may also call 1-800-544-8544 to request a free copy of the proxy voting guidelines.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third-party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2017 FMR LLC. All rights reserved.
This report and the financial statements contained herein are submitted for the general information of the shareholders of the Funds. This report is not authorized for distribution to prospective investors in the Funds unless preceded or accompanied by an effective prospectus.
A fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Forms N-Q are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330.
For a complete list of a fund's portfolio holdings, view the most recent holdings listing, semiannual report, or annual report on Fidelity's web site at http://www.fidelity.com, http://www.institutional.fidelity.com, or http://www.401k.com, as applicable.
NOT FDIC INSURED •MAY LOSE VALUE •NO BANK GUARANTEE
Neither the Funds nor Fidelity Distributors Corporation is a bank.
Energy Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Energy Portfolio | 36.05% | 0.38% | 2.41% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Energy Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $12,694 | Energy Portfolio | |
| $20,834 | S&P 500® Index | |
Energy Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager John Dowd: For the fiscal year, the fund gained 36.05%, well ahead of the 29.68% advance of the MSCI U.S. IMI Energy 25/50 Index, as well as the broad-based S&P 500®. Energy stocks returned to favor after a difficult two years, helped by gains in oil prices amid a November production-cut agreement among major oil-exporting countries. Brent crude, the global benchmark, rose 49% the past 12 months, closing at $53 a barrel and easing profit pressure at many cash-strapped firms. Versus the MSCI sector index, fund’s result was fueled primarily by my long-held stance of underweighting integrated oil & gas firms – the benchmark’s largest component – and strong conviction in U.S. based exploration & production (E&P) firms, which accounted for 51% of the fund’s assets at period end. The fund's two biggest relative contributors were lower-than-index exposure to Exxon Mobil and largely avoiding index stock Occidental Petroleum. Exxon returned 5% for the year, and Occidental gained about 11% before I eliminated our stake in October. Conversely, stock picks in E&Ps, services firms and storage & transportation detracted from relative results. On an individual basis, the fund’s biggest relative detractor was oil & gas refiner Valero Energy, previously a large holding sold from the fund in January.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Energy Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Exxon Mobil Corp. | 7.0 | 6.6 |
| Chevron Corp. | 6.3 | 3.9 |
| EOG Resources, Inc. | 5.8 | 5.9 |
| Baker Hughes, Inc. | 5.4 | 4.9 |
| Anadarko Petroleum Corp. | 4.6 | 3.3 |
| Pioneer Natural Resources Co. | 4.4 | 3.3 |
| Halliburton Co. | 3.6 | 1.5 |
| Diamondback Energy, Inc. | 3.4 | 3.1 |
| Schlumberger Ltd. | 3.2 | 6.1 |
| Rice Energy, Inc. | 2.0 | 2.9 |
| 45.7 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Oil, Gas & Consumable Fuels | 78.7% | |
| Energy Equipment & Services | 18.3% | |
| Chemicals | 0.7% | |
| Metals & Mining | 0.5% | |
| Independent Power and Renewable Electricity Producers | 0.5% | |
| All Others* | 1.3% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Oil, Gas & Consumable Fuels | 79.8% | |
| Energy Equipment & Services | 17.0% | |
| Independent Power and Renewable Electricity Producers | 0.7% | |
| Chemicals | 0.7% | |
| Metals & Mining | 0.5% | |
| All Others* | 1.3% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Energy Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 99.0% | |||
| Shares | Value | ||
| Chemicals - 0.7% | |||
| Commodity Chemicals - 0.7% | |||
| LyondellBasell Industries NV Class A | 167,700 | $15,300,948 | |
| Energy Equipment & Services - 18.3% | |||
| Oil & Gas Drilling - 0.7% | |||
| Nabors Industries Ltd. | 266,500 | 3,901,560 | |
| Odfjell Drilling A/S (a) | 1,434,080 | 2,411,943 | |
| Trinidad Drilling Ltd. (a) | 2,361,600 | 4,765,162 | |
| Xtreme Drilling & Coil Services Corp. (a) | 2,111,600 | 3,847,366 | |
| 14,926,031 | |||
| Oil & Gas Equipment & Services - 17.6% | |||
| Baker Hughes, Inc. | 2,053,400 | 123,778,952 | |
| C&J Energy Services, Inc. (a) | 124,100 | 4,964,000 | |
| Dril-Quip, Inc. (a) | 340,053 | 20,862,252 | |
| Exterran Corp. (a) | 132,000 | 4,018,080 | |
| Frank's International NV (b) | 989,400 | 12,070,680 | |
| Halliburton Co. | 1,528,900 | 81,734,994 | |
| National Oilwell Varco, Inc. | 213,400 | 8,625,628 | |
| Newpark Resources, Inc. (a) | 2,132,202 | 16,417,955 | |
| Oceaneering International, Inc. | 530,827 | 15,033,021 | |
| RigNet, Inc. (a) | 359,600 | 6,346,940 | |
| Schlumberger Ltd. | 914,258 | 73,469,773 | |
| Smart Sand, Inc. | 358,200 | 6,150,294 | |
| Superior Energy Services, Inc. | 312,400 | 5,154,600 | |
| Tesco Corp. (a) | 543,300 | 4,536,555 | |
| TETRA Technologies, Inc. (a) | 1,340,100 | 6,017,049 | |
| Total Energy Services, Inc. | 94,100 | 1,009,581 | |
| Weatherford International PLC (a) | 2,311,300 | 13,081,958 | |
| 403,272,312 | |||
| TOTAL ENERGY EQUIPMENT & SERVICES | 418,198,343 | ||
| Gas Utilities - 0.3% | |||
| Gas Utilities - 0.3% | |||
| Indraprastha Gas Ltd. | 445,664 | 6,967,320 | |
| Independent Power and Renewable Electricity Producers - 0.5% | |||
| Renewable Electricity - 0.5% | |||
| NextEra Energy Partners LP | 355,776 | 10,950,785 | |
| Metals & Mining - 0.5% | |||
| Diversified Metals & Mining - 0.5% | |||
| Hi-Crush Partners LP (a) | 727,249 | 12,508,683 | |
| Oil, Gas & Consumable Fuels - 78.7% | |||
| Coal & Consumable Fuels - 0.3% | |||
| CONSOL Energy, Inc. | 440,085 | 6,852,123 | |
| Integrated Oil & Gas - 13.5% | |||
| Chevron Corp. | 1,282,623 | 144,295,088 | |
| Exxon Mobil Corp. | 1,965,148 | 159,805,834 | |
| Suncor Energy, Inc. | 154,900 | 4,822,403 | |
| 308,923,325 | |||
| Oil & Gas Exploration & Production - 50.9% | |||
| Anadarko Petroleum Corp. | 1,641,015 | 106,091,620 | |
| ARC Resources Ltd. (b) | 140,300 | 2,091,507 | |
| California Resources Corp. (a) | 1 | 18 | |
| Callon Petroleum Co. (a) | 2,687,000 | 33,909,940 | |
| Carrizo Oil & Gas, Inc. (a) | 671,400 | 21,854,070 | |
| Centennial Resource Development, Inc. Class A (c) | 115,200 | 2,166,912 | |
| Chesapeake Energy Corp. (a)(b) | 360,900 | 1,966,905 | |
| Cimarex Energy Co. | 317,845 | 39,959,473 | |
| Concho Resources, Inc. (a) | 156,500 | 20,728,425 | |
| ConocoPhillips Co. | 535,000 | 25,449,950 | |
| Continental Resources, Inc. (a) | 574,100 | 25,949,320 | |
| Devon Energy Corp. | 647,100 | 28,058,256 | |
| Diamondback Energy, Inc. (a) | 773,000 | 77,964,780 | |
| Encana Corp. | 2,836,200 | 31,432,664 | |
| EOG Resources, Inc. | 1,362,964 | 132,193,878 | |
| Extraction Oil & Gas, Inc. | 1,280,583 | 22,666,319 | |
| Hess Corp. | 543,500 | 27,957,640 | |
| Jones Energy, Inc. (a)(b) | 438,603 | 1,403,530 | |
| Marathon Oil Corp. | 1,992,600 | 31,881,600 | |
| Newfield Exploration Co. (a) | 1,176,000 | 42,876,960 | |
| Noble Energy, Inc. | 1,166,988 | 42,490,033 | |
| Oasis Petroleum, Inc. (a) | 1,002,100 | 14,189,736 | |
| Parsley Energy, Inc. Class A (a) | 1,380,100 | 41,941,239 | |
| PDC Energy, Inc. (a) | 648,851 | 43,855,839 | |
| Pioneer Natural Resources Co. | 536,899 | 99,847,107 | |
| QEP Resources, Inc. (a) | 1,187,900 | 16,345,504 | |
| Range Resources Corp. | 147,700 | 4,079,474 | |
| Resolute Energy Corp. (a)(b) | 307,260 | 14,302,953 | |
| Rice Energy, Inc. (a) | 2,462,329 | 45,922,436 | |
| Ring Energy, Inc. (a) | 836,122 | 10,334,468 | |
| RSP Permian, Inc. (a) | 1,073,900 | 42,408,311 | |
| Sanchez Energy Corp. (a)(b) | 934,900 | 10,751,350 | |
| Seven Generations Energy Ltd. (a) | 1,278,700 | 23,692,823 | |
| SM Energy Co. | 1,102,000 | 27,164,300 | |
| Southwestern Energy Co. (a) | 167,000 | 1,254,170 | |
| Viper Energy Partners LP | 459,900 | 8,186,220 | |
| Whiting Petroleum Corp. (a) | 1,935,500 | 21,000,175 | |
| WPX Energy, Inc. (a) | 1,671,000 | 21,555,900 | |
| 1,165,925,805 | |||
| Oil & Gas Refining & Marketing - 6.6% | |||
| Alon U.S.A. Energy, Inc. | 588,800 | 7,159,808 | |
| Delek U.S. Holdings, Inc. | 695,008 | 16,728,843 | |
| HollyFrontier Corp. | 199,100 | 5,829,648 | |
| Keyera Corp. | 589,600 | 17,361,283 | |
| Marathon Petroleum Corp. | 757,500 | 37,572,000 | |
| Phillips 66 Co. | 552,991 | 43,238,366 | |
| Western Refining, Inc. | 348,800 | 12,738,176 | |
| World Fuel Services Corp. | 315,941 | 11,427,586 | |
| 152,055,710 | |||
| Oil & Gas Storage & Transport - 7.4% | |||
| Cheniere Energy Partners LP Holdings LLC | 347,070 | 8,444,213 | |
| Enable Midstream Partners LP | 227,600 | 3,714,432 | |
| Enterprise Products Partners LP | 83,823 | 2,349,559 | |
| GasLog Partners LP | 284,200 | 6,763,960 | |
| Gener8 Maritime, Inc. (a) | 716,108 | 3,494,607 | |
| Golar LNG Ltd. (b) | 424,400 | 11,590,364 | |
| Kinder Morgan, Inc. | 965,100 | 20,566,281 | |
| Noble Midstream Partners LP | 289,500 | 14,069,700 | |
| Plains All American Pipeline LP | 806,600 | 25,875,728 | |
| Rice Midstream Partners LP | 686,800 | 16,902,148 | |
| Targa Resources Corp. | 412,600 | 23,311,900 | |
| Teekay LNG Partners LP | 163,000 | 3,048,100 | |
| The Williams Companies, Inc. | 1,019,500 | 28,892,629 | |
| 169,023,621 | |||
| TOTAL OIL, GAS & CONSUMABLE FUELS | 1,802,780,584 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $1,898,278,700) | 2,266,706,663 | ||
| Money Market Funds - 2.2% | |||
| Fidelity Cash Central Fund, 0.60% (d) | 3,695,656 | 3,696,395 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (d)(e) | 45,494,081 | 45,503,181 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $49,192,253) | 49,199,576 | ||
| TOTAL INVESTMENT PORTFOLIO - 101.2% | |||
| (Cost $1,947,470,953) | 2,315,906,239 | ||
| NET OTHER ASSETS (LIABILITIES) - (1.2)% | (26,556,463) | ||
| NET ASSETS - 100% | $2,289,349,776 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $2,166,912 or 0.1% of net assets.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(e) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| Centennial Resource Development, Inc. Class A | 10/11/16 | $1,152,000 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $95,374 |
| Fidelity Securities Lending Cash Central Fund | 711,058 |
| Total | $806,432 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $2,266,706,664 | $2,265,697,083 | $1,009,581 | $-- |
| Money Market Funds | 49,199,575 | 49,199,575 | -- | -- |
| Total Investments in Securities: | $2,315,906,239 | $2,314,896,658 | $1,009,581 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 89.2% |
| Canada | 4.1% |
| Curacao | 3.2% |
| Netherlands | 1.2% |
| Others (Individually Less Than 1%) | 2.3% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Energy Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $43,868,955) — See accompanying schedule: Unaffiliated issuers (cost $1,898,278,700) | $2,266,706,663 | |
| Fidelity Central Funds (cost $49,192,253) | 49,199,576 | |
| Total Investments (cost $1,947,470,953) | $2,315,906,239 | |
| Cash | 230,369 | |
| Receivable for investments sold | 37,045,117 | |
| Receivable for fund shares sold | 2,156,115 | |
| Dividends receivable | 4,065,527 | |
| Distributions receivable from Fidelity Central Funds | 53,327 | |
| Prepaid expenses | 8,807 | |
| Other receivables | 133,012 | |
| Total assets | 2,359,598,513 | |
| Liabilities | ||
| Payable for investments purchased | $15,795,968 | |
| Payable for fund shares redeemed | 7,058,596 | |
| Accrued management fee | 1,097,036 | |
| Other affiliated payables | 470,350 | |
| Other payables and accrued expenses | 332,687 | |
| Collateral on securities loaned | 45,494,100 | |
| Total liabilities | 70,248,737 | |
| Net Assets | $2,289,349,776 | |
| Net Assets consist of: | ||
| Paid in capital | $2,271,856,265 | |
| Distributions in excess of net investment income | (5,487,131) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (345,261,061) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 368,241,703 | |
| Net Assets, for 51,910,640 shares outstanding | $2,289,349,776 | |
| Net Asset Value, offering price and redemption price per share ($2,289,349,776 ÷ 51,910,640 shares) | $44.10 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $28,462,260 | |
| Income from Fidelity Central Funds (including $711,058 from security lending) | 806,432 | |
| Total income | 29,268,692 | |
| Expenses | ||
| Management fee | $13,149,081 | |
| Transfer agent fees | 4,820,860 | |
| Accounting and security lending fees | 729,931 | �� |
| Custodian fees and expenses | 55,556 | |
| Independent trustees' fees and expenses | 51,829 | |
| Registration fees | 134,017 | |
| Audit | 52,536 | |
| Legal | 30,567 | |
| Interest | 4,314 | |
| Miscellaneous | 29,223 | |
| Total expenses before reductions | 19,057,914 | |
| Expense reductions | (254,840) | 18,803,074 |
| Net investment income (loss) | 10,465,618 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 74,458,586 | |
| Redemptions in-kind with affiliated entities | 45,915,372 | |
| Fidelity Central Funds | 5,374 | |
| Foreign currency transactions | 144 | |
| Total net realized gain (loss) | 120,379,476 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $190,893) | 542,957,134 | |
| Assets and liabilities in foreign currencies | (2,940) | |
| Total change in net unrealized appreciation (depreciation) | 542,954,194 | |
| Net gain (loss) | 663,333,670 | |
| Net increase (decrease) in net assets resulting from operations | $673,799,288 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $10,465,618 | $20,797,098 |
| Net realized gain (loss) | 120,379,476 | (357,170,983) |
| Change in net unrealized appreciation (depreciation) | 542,954,194 | (283,521,917) |
| Net increase (decrease) in net assets resulting from operations | 673,799,288 | (619,895,802) |
| Distributions to shareholders from net investment income | (13,079,637) | (19,169,416) |
| Distributions to shareholders from net realized gain | (3,147,768) | (3,157,395) |
| Total distributions | (16,227,405) | (22,326,811) |
| Share transactions | ||
| Proceeds from sales of shares | 898,918,597 | 938,319,380 |
| Reinvestment of distributions | 15,617,735 | 21,542,390 |
| Cost of shares redeemed | (1,211,768,502) | (568,659,411) |
| Net increase (decrease) in net assets resulting from share transactions | (297,232,170) | 391,202,359 |
| Redemption fees | 112,786 | 89,143 |
| Total increase (decrease) in net assets | 360,452,499 | (250,931,111) |
| Net Assets | ||
| Beginning of period | 1,928,897,277 | 2,179,828,388 |
| End of period | $2,289,349,776 | $1,928,897,277 |
| Other Information | ||
| Undistributed net investment income end of period | $– | $1,074,244 |
| Distributions in excess of net investment income end of period | $(5,487,131) | $– |
| Shares | ||
| Sold | 21,107,325 | 24,842,688 |
| Issued in reinvestment of distributions | 360,628 | 595,063 |
| Redeemed | (28,669,318) | (14,091,258) |
| Net increase (decrease) | (7,201,365) | 11,346,493 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Energy Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $32.63 | $45.64 | $56.25 | $54.81 | $55.14 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .18 | .42 | .46 | .44 | .53 |
| Net realized and unrealized gain (loss) | 11.58 | (12.98) | (6.37) | 7.86 | (.04) |
| Total from investment operations | 11.76 | (12.56) | (5.91) | 8.30 | .49 |
| Distributions from net investment income | (.24) | (.39) | (.46) | (.46) | (.47) |
| Distributions from net realized gain | (.05) | (.07) | (4.23) | (6.40) | (.35) |
| Total distributions | (.29) | (.45)C | (4.70)D | (6.86) | (.82) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $44.10 | $32.63 | $45.64 | $56.25 | $54.81 |
| Total ReturnF | 36.05% | (27.61)% | (11.25)% | 15.43% | 1.00% |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .79% | .80% | .79% | .80% | .82% |
| Expenses net of fee waivers, if any | .79% | .80% | .79% | .80% | .82% |
| Expenses net of all reductions | .78% | .79% | .79% | .80% | .81% |
| Net investment income (loss) | .44% | 1.03% | .85% | .76% | 1.04% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $2,289,350 | $1,928,897 | $2,179,828 | $1,995,808 | $2,126,992 |
| Portfolio turnover rateI | 93%J | 79% | 73%J | 98% | 80% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $.45 per share is comprised of distributions from net investment income of $.387 and distributions from net realized gain of $.066 per share.
D Total distributions of $4.70 per share is comprised of distributions from net investment income of $.463 and distributions from net realized gain of $4.233 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Energy Service Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Energy Service Portfolio | 46.36% | (2.74)% | 0.22% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Energy Service Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $10,226 | Energy Service Portfolio | |
| $20,834 | S&P 500® Index | |
Energy Service Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Ben Shuleva: For the fiscal year, the fund returned 46.36%, outperforming the 39.71% return of the MSCI U.S. IMI Energy Equipment & Services 25/50 Index and also topping the broad-based S&P 500®. A rebound in crude oil prices spurred a similar bounce in energy service stocks this period, with many once-languishing companies enjoying the biggest gains. Versus the MSCI sector benchmark, fund outperformance was driven by good stock picking, helped by my bullish outlook for oil prices and choices among higher-quality energy service companies whose valuations suffered during the energy downturn. Among individual stocks, an overweighting in compression equipment provider Exterran was among the fund's top relative contributors. After the November U.S. presidential election, the stock climbed steadily on economic optimism, doubling to about $30 a share in early January, when I began reducing our stake to take some profits. Timely ownership of drilling-fluids supplier Newpark Resources also lifted the fund's result. I bought Newpark early in the period after watching its share price reach a low in February 2016. As higher oil prices led to more drilling activity, Newpark's stock more than doubled in value, contributing to the fund's return. The fund's top relative contributor, though, was an out-of-benchmark stake in Norwegian international drilling contractor Borr Drilling, which I purchased at its initial public offering in December. Conversely, avoiding oil & gas driller Unit proved detrimental, as the stock returned 406% for the year. Also detracting was a negligible stake in industrial-sand provider Fairmount Santrol Holdings, which I sold from the fund by period end, and an underweighting in service giant and benchmark heavyweight Halliburton.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Energy Service Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Schlumberger Ltd. | 17.0 | 17.2 |
| Baker Hughes, Inc. | 13.6 | 18.6 |
| Halliburton Co. | 8.7 | 4.0 |
| TETRA Technologies, Inc. | 4.6 | 3.5 |
| TechnipFMC PLC | 4.2 | 0.0 |
| Dril-Quip, Inc. | 4.0 | 5.9 |
| Oceaneering International, Inc. | 3.8 | 3.6 |
| RigNet, Inc. | 3.8 | 4.2 |
| Weatherford International PLC | 3.2 | 3.1 |
| Borr Drilling Ltd. | 3.2 | 0.0 |
| 66.1 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Energy Equipment & Services | 97.1% | |
| Oil, Gas & Consumable Fuels | 2.8% | |
| Construction & Engineering | 0.2% | |
| All Others*,** | (0.1)% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
** Not included in the pie chart
| As of August 31, 2016 | ||
| Energy Equipment & Services | 96.9% | |
| Oil, Gas & Consumable Fuels | 2.4% | |
| Construction & Engineering | 0.2% | |
| Machinery | 0.1% | |
| All Others* | 0.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Energy Service Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 100.1% | |||
| Shares | Value | ||
| Construction & Engineering - 0.2% | |||
| Construction & Engineering - 0.2% | |||
| Enterprise Group, Inc. (a)(b) | 5,565,237 | $1,340,819 | |
| Energy Equipment & Services - 97.1% | |||
| Oil & Gas Drilling - 12.9% | |||
| Borr Drilling Ltd. (a)(b) | 6,250,000 | 23,110,873 | |
| Ensco PLC Class A | 798,900 | 7,781,286 | |
| Independence Contract Drilling, Inc. (a) | 117,800 | 700,910 | |
| Nabors Industries Ltd. | 867,700 | 12,703,128 | |
| Odfjell Drilling A/S (a) | 6,663,192 | 11,206,657 | |
| Parker Drilling Co. (a) | 5,569,456 | 10,581,966 | |
| Trinidad Drilling Ltd. (a) | 8,915,300 | 17,989,011 | |
| Xtreme Drilling & Coil Services Corp. (a)(b) | 5,731,713 | 10,443,266 | |
| 94,517,097 | |||
| Oil & Gas Equipment & Services - 84.2% | |||
| Baker Hughes, Inc. | 1,656,947 | 99,880,765 | |
| BW Offshore Ltd. (a) | 2,485,714 | 6,938,117 | |
| C&J Energy Services, Inc. (a) | 419,100 | 16,764,000 | |
| Calfrac Well Services Ltd. | 1,510,000 | 4,017,723 | |
| CSI Compressco LP | 700,655 | 7,784,277 | |
| Dril-Quip, Inc. (a)(c) | 477,200 | 29,276,220 | |
| Exterran Corp. (a) | 133,771 | 4,071,989 | |
| Forbes Energy Services Ltd. (a)(b)(c) | 1,634,545 | 62,930 | |
| Frank's International NV (c) | 1,288,979 | 15,725,544 | |
| Halliburton Co. | 1,192,534 | 63,752,868 | |
| Helix Energy Solutions Group, Inc. (a) | 1,128,700 | 9,323,062 | |
| McCoy Global, Inc. (a) | 1,050,250 | 1,462,854 | |
| National Oilwell Varco, Inc. (c) | 475,862 | 19,234,342 | |
| Newpark Resources, Inc. (a) | 2,818,152 | 21,699,770 | |
| Oceaneering International, Inc. | 994,707 | 28,170,102 | |
| RigNet, Inc. (a)(b)(c) | 1,572,114 | 27,747,812 | |
| Schlumberger Ltd. | 1,551,311 | 124,663,352 | |
| Smart Sand, Inc. | 502,600 | 8,629,642 | |
| Spectrum ASA (a) | 2,311,408 | 10,752,658 | |
| Superior Drilling Products, Inc. (a)(b)(c) | 2,409,569 | 2,481,856 | |
| Superior Energy Services, Inc. | 245,000 | 4,042,500 | |
| TechnipFMC PLC (a) | 955,162 | 30,870,836 | |
| Tesco Corp. (a)(b) | 2,735,670 | 22,842,845 | |
| TETRA Technologies, Inc. (a)(b) | 7,555,898 | 33,925,982 | |
| TETRA Technologies, Inc. warrants 12/14/21 (a)(b) | 300,100 | 435,145 | |
| Weatherford International PLC (a) | 4,127,366 | 23,360,892 | |
| 617,918,083 | |||
| TOTAL ENERGY EQUIPMENT & SERVICES | 712,435,180 | ||
| Oil, Gas & Consumable Fuels - 2.8% | |||
| Oil & Gas Exploration & Production - 0.2% | |||
| Apache Corp. | 22,700 | 1,193,793 | |
| Devon Energy Corp. | 14,400 | 624,384 | |
| 1,818,177 | |||
| Oil & Gas Refining & Marketing - 0.6% | |||
| Alon U.S.A. Partners LP | 487,971 | 4,669,882 | |
| Oil & Gas Storage & Transport - 2.0% | |||
| Golar LNG Ltd. (c) | 87,533 | 2,390,526 | |
| StealthGas, Inc. (a)(b) | 2,424,657 | 10,668,491 | |
| Teekay LNG Partners LP | 77,900 | 1,456,730 | |
| 14,515,747 | |||
| TOTAL OIL, GAS & CONSUMABLE FUELS | 21,003,806 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $707,814,842) | 734,779,805 | ||
| Money Market Funds - 5.0% | |||
| Fidelity Securities Lending Cash Central Fund 0.62% (d)(e) | |||
| (Cost $36,658,005) | 36,653,001 | 36,660,332 | |
| TOTAL INVESTMENT PORTFOLIO - 105.1% | |||
| (Cost $744,472,847) | 771,440,137 | ||
| NET OTHER ASSETS (LIABILITIES) - (5.1)% | (37,348,668) | ||
| NET ASSETS - 100% | $734,091,469 |
Legend
(a) Non-income producing
(b) Affiliated company
(c) Security or a portion of the security is on loan at period end.
(d) Investment made with cash collateral received from securities on loan.
(e) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $41,531 |
| Fidelity Securities Lending Cash Central Fund | 488,050 |
| Total | $529,581 |
Other Affiliated Issuers
An affiliated company is a company in which the Fund has ownership of at least 5% of the voting securities. Fiscal year to date transactions with companies which are or were affiliates are as follows:
| Affiliate | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Value, end of period |
| Borr Drilling Ltd. | $-- | $12,449,706 | $-- | $-- | $23,110,873 |
| Enterprise Group, Inc. | 966,615 | -- | -- | -- | 1,340,819 |
| Forbes Energy Services Ltd. | 644,120 | -- | 57,207 | -- | 62,930 |
| Independence Contract Drilling, Inc. | 3,431,324 | 7,924,907 | 15,276,282 | -- | -- |
| RigNet, Inc. | 3,792,360 | 21,049,543 | 4,995,464 | -- | 27,747,812 |
| StealthGas, Inc. | 7,258,706 | 659,172 | 345,867 | -- | 10,668,491 |
| Superior Drilling Products, Inc. | 2,449,544 | 1,315,980 | -- | -- | 2,481,856 |
| Tesco Corp. | 18,331,231 | 9,117,034 | 8,153,469 | -- | 22,842,845 |
| TETRA Technologies, Inc. | 7,757,996 | 32,508,454 | 2,441,693 | -- | 33,925,982 |
| TETRA Technologies, Inc. warrants 12/14/21 | -- | -- | -- | -- | 435,145 |
| Xtreme Drilling & Coil Services Corp. | 6,357,158 | 311,260 | -- | -- | 10,443,266 |
| Total | $50,989,054 | $85,336,056 | $31,269,982 | $-- | $133,060,019 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $734,779,805 | $730,326,937 | $4,452,868 | $-- |
| Money Market Funds | 36,660,332 | 36,660,332 | -- | -- |
| Total Investments in Securities: | $771,440,137 | $766,987,269 | $4,452,868 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 53.7% |
| Curacao | 17.0% |
| Canada | 7.9% |
| Bermuda | 6.1% |
| United Kingdom | 5.3% |
| Ireland | 3.2% |
| Norway | 3.0% |
| Netherlands | 2.1% |
| Marshall Islands | 1.7% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Energy Service Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $34,731,434) — See accompanying schedule: Unaffiliated issuers (cost $557,838,706) | $601,719,786 | |
| Fidelity Central Funds (cost $36,658,005) | 36,660,332 | |
| Other affiliated issuers (cost $149,976,136) | 133,060,019 | |
| Total Investments (cost $744,472,847) | $771,440,137 | |
| Receivable for investments sold | 16,346,449 | |
| Receivable for fund shares sold | 393,560 | |
| Dividends receivable | 1,138,977 | |
| Distributions receivable from Fidelity Central Funds | 53,511 | |
| Prepaid expenses | 1,765 | |
| Other receivables | 43,720 | |
| Total assets | 789,418,119 | |
| Liabilities | ||
| Payable to custodian bank | $3,930,192 | |
| Payable for investments purchased | 8,064,504 | |
| Payable for fund shares redeemed | 6,097,803 | |
| Accrued management fee | 351,986 | |
| Other affiliated payables | 150,979 | |
| Other payables and accrued expenses | 74,664 | |
| Collateral on securities loaned | 36,656,522 | |
| Total liabilities | 55,326,650 | |
| Net Assets | $734,091,469 | |
| Net Assets consist of: | ||
| Paid in capital | $741,306,220 | |
| Distributions in excess of net investment income | (393,306) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (33,785,266) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 26,963,821 | |
| Net Assets, for 13,419,110 shares outstanding | $734,091,469 | |
| Net Asset Value, offering price and redemption price per share ($734,091,469 ÷ 13,419,110 shares) | $54.70 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $6,090,769 | |
| Income from Fidelity Central Funds (including $488,050 from security lending) | 529,581 | |
| Total income | 6,620,350 | |
| Expenses | ||
| Management fee | $3,046,151 | |
| Transfer agent fees | 1,262,301 | |
| Accounting and security lending fees | 212,683 | |
| Custodian fees and expenses | 36,288 | |
| Independent trustees' fees and expenses | 11,797 | |
| Registration fees | 51,917 | |
| Audit | 55,161 | |
| Legal | 6,778 | |
| Interest | 900 | |
| Miscellaneous | 7,244 | |
| Total expenses before reductions | 4,691,220 | |
| Expense reductions | (55,250) | 4,635,970 |
| Net investment income (loss) | 1,984,380 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (16,889,693) | |
| Fidelity Central Funds | 3,256 | |
| Other affiliated issuers | (2,264,778) | |
| Foreign currency transactions | (72,831) | |
| Total net realized gain (loss) | (19,224,046) | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 205,013,743 | |
| Assets and liabilities in foreign currencies | (400) | |
| Total change in net unrealized appreciation (depreciation) | 205,013,343 | |
| Net gain (loss) | 185,789,297 | |
| Net increase (decrease) in net assets resulting from operations | $187,773,677 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $1,984,380 | $5,466,467 |
| Net realized gain (loss) | (19,224,046) | 11,618,381 |
| Change in net unrealized appreciation (depreciation) | 205,013,343 | (215,579,560) |
| Net increase (decrease) in net assets resulting from operations | 187,773,677 | (198,494,712) |
| Distributions to shareholders from net investment income | (2,569,509) | (4,585,495) |
| Share transactions | ||
| Proceeds from sales of shares | 347,580,414 | 192,822,217 |
| Reinvestment of distributions | 2,440,107 | 4,345,896 |
| Cost of shares redeemed | (236,538,737) | (257,558,829) |
| Net increase (decrease) in net assets resulting from share transactions | 113,481,784 | (60,390,716) |
| Redemption fees | 30,328 | 43,210 |
| Total increase (decrease) in net assets | 298,716,280 | (263,427,713) |
| Net Assets | ||
| Beginning of period | 435,375,189 | 698,802,902 |
| End of period | $734,091,469 | $435,375,189 |
| Other Information | ||
| Undistributed net investment income end of period | $– | $66,706 |
| Distributions in excess of net investment income end of period | $(393,306) | $– |
| Shares | ||
| Sold | 6,670,683 | 3,908,817 |
| Issued in reinvestment of distributions | 46,274 | 97,628 |
| Redeemed | (4,895,393) | (5,268,324) |
| Net increase (decrease) | 1,821,564 | (1,261,879) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Energy Service Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $37.54 | $54.34 | $86.13 | $74.01 | $73.01 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .17 | .45 | .45 | .21 | –C |
| Net realized and unrealized gain (loss) | 17.22 | (16.85) | (23.10) | 12.09 | 1.00 |
| Total from investment operations | 17.39 | (16.40) | (22.65) | 12.30 | 1.00 |
| Distributions from net investment income | (.23) | (.40) | (.39) | (.18) | – |
| Distributions from net realized gain | – | – | (8.75) | – | – |
| Total distributions | (.23) | (.40) | (9.14) | (.18) | – |
| Redemption fees added to paid in capitalB,C | – | – | – | – | – |
| Net asset value, end of period | $54.70 | $37.54 | $54.34 | $86.13 | $74.01 |
| Total ReturnD | 46.36% | (30.30)% | (27.82)% | 16.62% | 1.37% |
| Ratios to Average Net AssetsE,F | |||||
| Expenses before reductions | .85% | .85% | .79% | .80% | .82% |
| Expenses net of fee waivers, if any | .85% | .84% | .79% | .80% | .82% |
| Expenses net of all reductions | .84% | .81% | .79% | .80% | .81% |
| Net investment income (loss) | .36% | .92% | .56% | .26% | .01% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $734,091 | $435,375 | $698,803 | $1,047,980 | $1,236,403 |
| Portfolio turnover rateG | 96% | 58% | 55% | 34% | 49% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Amount represents less than $.005 per share.
D Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
E Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
F Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
G Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Natural Gas Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Natural Gas Portfolio | 56.75% | (2.06)% | (1.37)% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Natural Gas Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $8,707 | Natural Gas Portfolio | |
| $20,834 | S&P 500® Index | |
Natural Gas Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks (+60%), especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager Ted Davis: For the fiscal year ending February 28, 2017, the fund advanced 56.75%, well ahead of the 41.24% return of the S&P® Custom Natural Gas Index and the 24.98% return of the S&P 500®. Our exploration & production (E&P) holdings helped most versus S&P® Custom index. Within this segment, I focused on companies I thought had material leverage to oil prices, challenged balance sheets that could be improved, and stories I thought were misunderstood by other investors. This led me to significantly overweight names such as Encana, Devon Energy, Whiting Petroleum and Marathon oil, the fund’s top four relative contributors. Conversely, an underweighting and unfavorable picks in the strong-performing oil & gas storage & transportation group hurt, including Oneok, Williams Companies and Targa Resources. As of period end, I have positioned the fund more cautiously, reducing E&P exposure in favor of equipment & services and storage & transportation names I thinks have potential upside.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Note to Shareholders: On April 1, 2017, the fund’s industry benchmark will change from the S&P® Custom Natural Gas Index to the FactSet Natural Gas Linked Index. Due to the new international benchmark guidelines, S&P® Dow Jones® Indices has decided to stop offering its brand on custom benchmarks, effective March 31, 2017. Fidelity believes that the new FactSet index will continue to provide shareholders with meaningful performance comparisons.Natural Gas Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| Baker Hughes, Inc. | 9.9 | 10.5 |
| Schlumberger Ltd. | 7.8 | 5.1 |
| Anadarko Petroleum Corp. | 7.8 | 5.2 |
| ConocoPhillips Co. | 6.5 | 7.1 |
| Halliburton Co. | 4.5 | 3.7 |
| Boardwalk Pipeline Partners, LP | 4.2 | 4.2 |
| Encana Corp. | 3.8 | 6.0 |
| Noble Energy, Inc. | 2.7 | 1.4 |
| Rice Energy, Inc. | 2.5 | 1.2 |
| Devon Energy Corp. | 2.5 | 6.0 |
| 52.2 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Oil, Gas & Consumable Fuels | 57.0% | |
| Energy Equipment & Services | 39.7% | |
| Gas Utilities | 2.8% | |
| All Others* | 0.5% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Oil, Gas & Consumable Fuels | 67.2% | |
| Energy Equipment & Services | 25.0% | |
| Gas Utilities | 4.6% | |
| All Others* | 3.2% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Natural Gas Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 99.5% | |||
| Shares | Value | ||
| Energy Equipment & Services - 39.7% | |||
| Oil & Gas Drilling - 6.0% | |||
| Ensco PLC Class A | 651,700 | $6,347,558 | |
| Nabors Industries Ltd. | 428,300 | 6,270,312 | |
| Patterson-UTI Energy, Inc. | 388,200 | 10,722,084 | |
| Precision Drilling Corp. (a) | 1,047,300 | 5,353,988 | |
| 28,693,942 | |||
| Oil & Gas Equipment & Services - 33.7% | |||
| Baker Hughes, Inc. | 785,200 | 47,331,855 | |
| Era Group, Inc. (a) | 267,500 | 3,686,150 | |
| Exterran Corp. (a) | 319,800 | 9,734,712 | |
| Forum Energy Technologies, Inc. (a) | 239,400 | 5,194,980 | |
| Frank's International NV (b) | 260,400 | 3,176,880 | |
| Halliburton Co. | 400,700 | 21,421,422 | |
| National Oilwell Varco, Inc. | 258,300 | 10,440,486 | |
| Pason Systems, Inc. | 285,500 | 3,888,492 | |
| Schlumberger Ltd. | 468,832 | 37,675,340 | |
| Superior Energy Services, Inc. | 406,700 | 6,710,550 | |
| TETRA Technologies, Inc. (a) | 660,100 | 2,963,849 | |
| Weatherford International PLC (a) | 1,707,300 | 9,663,318 | |
| 161,888,034 | |||
| TOTAL ENERGY EQUIPMENT & SERVICES | 190,581,976 | ||
| Gas Utilities - 2.8% | |||
| Gas Utilities - 2.8% | |||
| Spire, Inc. | 74,800 | 4,929,320 | |
| UGI Corp. | 69,200 | 3,337,516 | |
| Valener, Inc. | 310,600 | 4,864,087 | |
| 13,130,923 | |||
| Oil, Gas & Consumable Fuels - 57.0% | |||
| Integrated Oil & Gas - 1.7% | |||
| Suncor Energy, Inc. | 269,400 | 8,387,058 | |
| Oil & Gas Exploration & Production - 45.4% | |||
| Advantage Oil & Gas Ltd. (a) | 1,315,900 | 7,925,915 | |
| Anadarko Petroleum Corp. | 576,400 | 37,264,260 | |
| Cimarex Energy Co. | 10,400 | 1,307,488 | |
| ConocoPhillips Co. | 660,000 | 31,396,200 | |
| Crescent Point Energy Corp. (b) | 558,100 | 6,139,016 | |
| Crew Energy, Inc. (a) | 2,227,300 | 9,156,044 | |
| Crown Point Energy, Inc. (a)(c) | 181,658 | 6,155 | |
| Devon Energy Corp. | 277,846 | 12,047,403 | |
| Encana Corp. | 1,645,400 | 18,235,422 | |
| Enerplus Corp. | 134,600 | 1,187,707 | |
| Gulfport Energy Corp. (a) | 427,700 | 7,416,318 | |
| Hess Corp. | 62,000 | 3,189,280 | |
| Lekoil Ltd. (a) | 6,233,200 | 1,894,944 | |
| Marathon Oil Corp. | 521,600 | 8,345,600 | |
| Noble Energy, Inc. | 360,000 | 13,107,600 | |
| Northern Blizzard Resources, Inc. (b) | 2,316,800 | 5,860,900 | |
| Oasis Petroleum, Inc. (a) | 182,300 | 2,581,368 | |
| PDC Energy, Inc. (a) | 106,400 | 7,191,576 | |
| Range Resources Corp. | 129,100 | 3,565,742 | |
| Rice Energy, Inc. (a) | 651,900 | 12,157,935 | |
| Savannah Petroleum PLC (a) | 4,767,600 | 1,789,553 | |
| SM Energy Co. | 238,200 | 5,871,630 | |
| Surge Energy, Inc. (b) | 4,029,600 | 8,039,783 | |
| Whiting Petroleum Corp. (a) | 1,105,500 | 11,994,675 | |
| 217,672,514 | |||
| Oil & Gas Refining & Marketing - 0.7% | |||
| Keyera Corp. | 117,800 | 3,468,723 | |
| Oil & Gas Storage & Transport - 9.2% | |||
| Boardwalk Pipeline Partners, LP | 1,113,800 | 20,159,780 | |
| Enbridge, Inc. | 70,946 | 2,969,090 | |
| Energy Transfer Partners LP | 136,400 | 5,157,284 | |
| The Williams Companies, Inc. | 151,800 | 4,302,012 | |
| TransCanada Corp. | 249,700 | 11,479,206 | |
| 44,067,372 | |||
| TOTAL OIL, GAS & CONSUMABLE FUELS | 273,595,667 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $567,637,716) | 477,308,566 | ||
| Money Market Funds - 3.7% | |||
| Fidelity Cash Central Fund, 0.60% (d) | 786,626 | 786,783 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (d)(e) | 17,123,121 | 17,126,546 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $17,913,329) | 17,913,329 | ||
| TOTAL INVESTMENT PORTFOLIO - 103.2% | |||
| (Cost $585,551,045) | 495,221,895 | ||
| NET OTHER ASSETS (LIABILITIES) - (3.2)% | (15,342,787) | ||
| NET ASSETS - 100% | $479,879,108 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At the end of the period, the value of these securities amounted to $6,155 or 0.0% of net assets.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(e) Investment made with cash collateral received from securities on loan.
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $53,125 |
| Fidelity Securities Lending Cash Central Fund | 194,222 |
| Total | $247,347 |
Investment Valuation
All investments are categorized as Level 1 under the Fair Value Hierarchy. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 66.0% |
| Canada | 20.2% |
| Curacao | 7.8% |
| Ireland | 2.0% |
| United Kingdom | 1.7% |
| Bermuda | 1.3% |
| Others (Individually Less Than 1%) | 1.0% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Natural Gas Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $15,857,473) — See accompanying schedule: Unaffiliated issuers (cost $567,637,716) | $477,308,566 | |
| Fidelity Central Funds (cost $17,913,329) | 17,913,329 | |
| Total Investments (cost $585,551,045) | $495,221,895 | |
| Receivable for investments sold | 6,722,912 | |
| Receivable for fund shares sold | 282,834 | |
| Dividends receivable | 646,151 | |
| Distributions receivable from Fidelity Central Funds | 13,760 | |
| Prepaid expenses | 1,480 | |
| Other receivables | 68,040 | |
| Total assets | 502,957,072 | |
| Liabilities | ||
| Payable for investments purchased | $1,540,033 | |
| Payable for fund shares redeemed | 3,990,012 | |
| Accrued management fee | 241,480 | |
| Other affiliated payables | 121,139 | |
| Other payables and accrued expenses | 62,429 | |
| Collateral on securities loaned | 17,122,871 | |
| Total liabilities | 23,077,964 | |
| Net Assets | $479,879,108 | |
| Net Assets consist of: | ||
| Paid in capital | $1,017,479,611 | |
| Distributions in excess of net investment income | (3,915,326) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (443,353,983) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | (90,331,194) | |
| Net Assets, for 17,287,959 shares outstanding | $479,879,108 | |
| Net Asset Value, offering price and redemption price per share ($479,879,108 ÷ 17,287,959 shares) | $27.76 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $5,584,400 | |
| Income from Fidelity Central Funds (including $194,222 from security lending) | 247,347 | |
| Total income | 5,831,747 | |
| Expenses | ||
| Management fee | $2,348,005 | |
| Transfer agent fees | 1,072,831 | |
| Accounting and security lending fees | 171,492 | |
| Custodian fees and expenses | 21,594 | |
| Independent trustees' fees and expenses | 9,469 | |
| Registration fees | 53,614 | |
| Audit | 41,443 | |
| Legal | 5,117 | |
| Interest | 97 | |
| Miscellaneous | 5,083 | |
| Total expenses before reductions | 3,728,745 | |
| Expense reductions | (31,120) | 3,697,625 |
| Net investment income (loss) | 2,134,122 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | (14,586,321) | |
| Fidelity Central Funds | 6,726 | |
| Foreign currency transactions | (17,477) | |
| Total net realized gain (loss) | (14,597,072) | |
| Change in net unrealized appreciation (depreciation) on: Investment securities | 159,313,685 | |
| Assets and liabilities in foreign currencies | (2,133) | |
| Total change in net unrealized appreciation (depreciation) | 159,311,552 | |
| Net gain (loss) | 144,714,480 | |
| Net increase (decrease) in net assets resulting from operations | $146,848,602 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $2,134,122 | $4,910,158 |
| Net realized gain (loss) | (14,597,072) | (90,294,465) |
| Change in net unrealized appreciation (depreciation) | 159,311,552 | (114,969,972) |
| Net increase (decrease) in net assets resulting from operations | 146,848,602 | (200,354,279) |
| Distributions to shareholders from net investment income | (2,707,349) | (5,529,387) |
| Distributions to shareholders from net realized gain | (399,401) | – |
| Total distributions | (3,106,750) | (5,529,387) |
| Share transactions | ||
| Proceeds from sales of shares | 363,264,746 | 114,790,165 |
| Reinvestment of distributions | 2,868,753 | 5,201,186 |
| Cost of shares redeemed | (286,062,132) | (188,439,341) |
| Net increase (decrease) in net assets resulting from share transactions | 80,071,367 | (68,447,990) |
| Redemption fees | 75,698 | 37,159 |
| Total increase (decrease) in net assets | 223,888,917 | (274,294,497) |
| Net Assets | ||
| Beginning of period | 255,990,191 | 530,284,688 |
| End of period | $479,879,108 | $255,990,191 |
| Other Information | ||
| Distributions in excess of net investment income end of period | $(3,915,326) | $(2,307,905) |
| Shares | ||
| Sold | 13,555,828 | 4,431,127 |
| Issued in reinvestment of distributions | 106,018 | 253,143 |
| Redeemed | (10,729,732) | (6,872,469) |
| Net increase (decrease) | 2,932,114 | (2,188,199) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Natural Gas Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $17.83 | $32.05 | $39.16 | $32.86 | $32.91 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .13 | .33 | .34 | .35 | .30 |
| Net realized and unrealized gain (loss) | 9.98 | (14.16) | (7.03) | 6.61 | (.03)C |
| Total from investment operations | 10.11 | (13.83) | (6.69) | 6.96 | .27 |
| Distributions from net investment income | (.15) | (.39) | (.38) | (.33) | (.27) |
| Distributions from net realized gain | (.03) | – | (.04) | (.32) | (.05) |
| Total distributions | (.18) | (.39) | (.42) | (.66)D | (.32) |
| Redemption fees added to paid in capitalB,E | – | – | – | – | – |
| Net asset value, end of period | $27.76 | $17.83 | $32.05 | $39.16 | $32.86 |
| Total ReturnF | 56.75% | (43.29)% | (17.15)% | 21.28% | .86%C |
| Ratios to Average Net AssetsG,H | |||||
| Expenses before reductions | .87% | .89% | .82% | .84% | .87% |
| Expenses net of fee waivers, if any | .87% | .88% | .82% | .84% | .87% |
| Expenses net of all reductions | .87% | .88% | .82% | .84% | .86% |
| Net investment income (loss) | .50% | 1.24% | .84% | .98% | .96% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $479,879 | $255,990 | $530,285 | $840,514 | $650,073 |
| Portfolio turnover rateI | 76% | 62% | 147%J | 135% | 107% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net realized and unrealized gain (loss) per share reflects proceeds received from litigation which amounted to $.03 per share. Excluding these litigation proceeds, the total return would have been 0.75%.
D Total distributions of $.66 per share is comprised of distributions from net investment income of $.332 and distributions from net realized gain of $.324 per share.
E Amount represents less than $.005 per share.
F Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
G Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
H Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
I Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Natural Resources Portfolio
Performance: The Bottom Line
Average annual total return reflects the change in the value of an investment, assuming reinvestment of distributions from dividend income and capital gains (the profits earned upon the sale of securities that have grown in value, if any) and assuming a constant rate of performance each year. The hypothetical investment and the average annual total returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. During periods of reimbursement by Fidelity, a fund’s total return will be greater than it would be had the reimbursement not occurred. How a fund did yesterday is no guarantee of how it will do tomorrow.
Average Annual Total Returns
| For the periods ended February 28, 2017 | Past 1 year | Past 5 years | Past 10 years |
| Natural Resources Portfolio | 34.54% | (1.73)% | 1.97% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Natural Resources Portfolio on February 28, 2007.
The chart shows how the value of your investment would have changed, and also shows how the S&P 500® Index performed over the same period.
| Period Ending Values | ||
| $12,151 | Natural Resources Portfolio | |
| $20,834 | S&P 500® Index | |
Natural Resources Portfolio
Management's Discussion of Fund Performance
Market Recap: The U.S. equity bellwether S&P 500® index gained 24.98% for the year ending February 28, 2017, rising sharply in the period’s final four months on renewed optimism for economic growth. The beginning of the period saw improving investor sentiment amid U.S. job gains, a rally in energy, and other stimuli that helped keep the seven-year bull uptrend intact. Markets tumbled briefly following Brexit – the U.K.’s June vote to exit the European Union – recovering quickly to settle into a flattish stretch until the November U.S. presidential election. Stocks then broke out in response to Donald Trump’s surprise victory, surging to a series of new all-time highs on expectations for reflation and fiscal stimulus. For the year, financials (+47%) proved the top-performing sector by far, riding an uptick in bond yields and a rally in banks, especially post-election. Industrials (+27%), energy (+26%) and materials (+28%) also fared well, the latter two driven by a cyclical rebound in commodity prices. Information technology rose 33%, despite cooling off late in 2016. Conversely, real estate and health care each returned 15%, lagging the broad market on prospects of rising interest rates and an uncertain political and regulatory outlook, respectively. An improved backdrop for riskier assets curbed dividend-rich telecom services (+9%), consumer staples (+12%) and utilities (+16%).Comments from Portfolio Manager John Dowd: For the fiscal year, the fund rose 34.54%, outpacing the 32.04% advance of the S&P® North American Natural Resources Sector Index, and surpassing the broad-based S&P 500®. Natural resources stocks fared very well during the period, helped by energy's rebound from a two-year collapse in crude oil prices brought on by global oversupply. Shrinking inventories and a November agreement among major oil-exporting countries to cut production lifted global crude oil prices 49% for the year, closing at $53 a barrel and easing profit pressure at many cash-strapped firms. Versus the Natural Resources sector index, the fund’s results were fueled by a large overweighting in the outperforming oil & gas exploration & production (E&P) segment, which accounted for 48% of the fund’s assets at period end. Here, we’ve had a long-standing bias toward U.S.-based E&Ps that we believe have improved productivity and profitability through new technology and good management. A significant underweighting in the weaker integrated oil & gas segment – the benchmark’s second-largest component – also boosted relative results. Among individual stocks, largely avoiding Exxon Mobil, which I bought in August, and Occidental Petroleum, added the most value to the fund’s relative result. I sold from Occidental from the fund by period end. Conversely, the fund’s biggest relative detractor by far was oil & gas refining and marketing firm Valero Energy, previously a large holding that I sold from the fund in January. Elsewhere, positioning in gold and silver stocks detracted. Here, the fund was hurt by timing in gold producers Tahoe Resources and New Gold. I purchased both in the second half of the year, and the stocks struggled through period end.The views expressed above reflect those of the portfolio manager(s) only through the end of the period as stated on the cover of this report and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization. Any such views are subject to change at any time based upon market or other conditions and Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.
Natural Resources Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2017
| % of fund's net assets | % of fund's net assets 6 months ago | |
| EOG Resources, Inc. | 6.0 | 6.3 |
| Baker Hughes, Inc. | 5.7 | 5.1 |
| Halliburton Co. | 3.8 | 1.6 |
| Schlumberger Ltd. | 3.7 | 6.7 |
| Anadarko Petroleum Corp. | 3.6 | 2.7 |
| Pioneer Natural Resources Co. | 3.5 | 2.4 |
| Diamondback Energy, Inc. | 3.5 | 3.2 |
| Chevron Corp. | 3.4 | 1.7 |
| Marathon Petroleum Corp. | 2.1 | 0.0 |
| Rice Energy, Inc. | 2.1 | 2.9 |
| 37.4 |
Top Industries (% of fund's net assets)
| As of February 28, 2017 | ||
| Oil, Gas & Consumable Fuels | 69.0% | |
| Energy Equipment & Services | 18.3% | |
| Metals & Mining | 5.1% | |
| Containers & Packaging | 5.0% | |
| Chemicals | 1.2% | |
| All Others* | 1.4% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
| As of August 31, 2016 | ||
| Oil, Gas & Consumable Fuels | 68.2% | |
| Energy Equipment & Services | 16.8% | |
| Metals & Mining | 6.6% | |
| Containers & Packaging | 5.1% | |
| Chemicals | 1.2% | |
| All Others* | 2.1% | |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Percentages shown as 0.0% may reflect amounts less than 0.05%.
Prior period industry classifications reflect the categories in place as of the date indicated and have not been adjusted to reflect current industry classifications.
Natural Resources Portfolio
Investments February 28, 2017
Showing Percentage of Net Assets
| Common Stocks - 99.4% | |||
| Shares | Value | ||
| Chemicals - 1.2% | |||
| Commodity Chemicals - 1.2% | |||
| LyondellBasell Industries NV Class A | 115,600 | $10,547,344 | |
| Containers & Packaging - 5.0% | |||
| Metal & Glass Containers - 1.8% | |||
| Ball Corp. | 159,400 | 11,720,682 | |
| Berry Plastics Group, Inc. (a) | 90,800 | 4,569,964 | |
| 16,290,646 | |||
| Paper Packaging - 3.2% | |||
| Graphic Packaging Holding Co. | 400,900 | 5,352,015 | |
| Packaging Corp. of America | 116,200 | 10,740,366 | |
| WestRock Co. | 246,700 | 13,252,724 | |
| 29,345,105 | |||
| TOTAL CONTAINERS & PACKAGING | 45,635,751 | ||
| Energy Equipment & Services - 18.3% | |||
| Oil & Gas Drilling - 0.5% | |||
| Odfjell Drilling A/S (a) | 696,800 | 1,171,931 | |
| Trinidad Drilling Ltd. (a) | 856,400 | 1,728,017 | |
| Xtreme Drilling & Coil Services Corp. (a) | 1,009,400 | 1,839,142 | |
| 4,739,090 | |||
| Oil & Gas Equipment & Services - 17.8% | |||
| Baker Hughes, Inc. | 861,200 | 51,913,136 | |
| C&J Energy Services, Inc. (a) | 47,800 | 1,912,000 | |
| Dril-Quip, Inc. (a) | 108,325 | 6,645,739 | |
| Exterran Corp. (a) | 21,000 | 639,240 | |
| Frank's International NV (b) | 311,500 | 3,800,300 | |
| Halliburton Co. | 648,800 | 34,684,848 | |
| National Oilwell Varco, Inc. | 54,200 | 2,190,764 | |
| Newpark Resources, Inc. (a) | 803,000 | 6,183,100 | |
| Oceaneering International, Inc. | 187,200 | 5,301,504 | |
| RigNet, Inc. (a) | 111,400 | 1,966,210 | |
| Schlumberger Ltd. | 420,765 | 33,812,675 | |
| Smart Sand, Inc. | 145,500 | 2,498,235 | |
| Superior Energy Services, Inc. | 48,000 | 792,000 | |
| Tesco Corp. (a) | 197,700 | 1,650,795 | |
| TETRA Technologies, Inc. (a) | 518,900 | 2,329,861 | |
| Total Energy Services, Inc. | 100,600 | 1,079,318 | |
| Weatherford International PLC (a) | 847,400 | 4,796,284 | |
| 162,196,009 | |||
| TOTAL ENERGY EQUIPMENT & SERVICES | 166,935,099 | ||
| Gas Utilities - 0.3% | |||
| Gas Utilities - 0.3% | |||
| Indraprastha Gas Ltd. | 178,348 | 2,788,216 | |
| Independent Power and Renewable Electricity Producers - 0.5% | |||
| Renewable Electricity - 0.5% | |||
| NextEra Energy Partners LP | 142,200 | 4,376,916 | |
| Metals & Mining - 5.1% | |||
| Diversified Metals & Mining - 0.5% | |||
| Hi-Crush Partners LP (a) | 261,100 | 4,490,920 | |
| Gold - 3.4% | |||
| B2Gold Corp. (a) | 1,178,500 | 3,620,148 | |
| Franco-Nevada Corp. | 28,500 | 1,836,986 | |
| New Gold, Inc. (a) | 2,284,500 | 6,587,588 | |
| Randgold Resources Ltd. sponsored ADR (b) | 133,973 | 12,286,664 | |
| Tahoe Resources, Inc. | 829,600 | 7,033,049 | |
| 31,364,435 | |||
| Silver - 1.2% | |||
| Silver Wheaton Corp. | 565,200 | 11,008,676 | |
| TOTAL METALS & MINING | 46,864,031 | ||
| Oil, Gas & Consumable Fuels - 69.0% | |||
| Coal & Consumable Fuels - 0.3% | |||
| CONSOL Energy, Inc. | 154,200 | 2,400,894 | |
| Integrated Oil & Gas - 5.3% | |||
| Chevron Corp. | 277,600 | 31,230,000 | |
| Exxon Mobil Corp. | 190,900 | 15,523,988 | |
| Suncor Energy, Inc. | 54,600 | 1,699,827 | |
| 48,453,815 | |||
| Oil & Gas Exploration & Production - 48.0% | |||
| Anadarko Petroleum Corp. | 510,800 | 33,023,220 | |
| Callon Petroleum Co. (a) | 979,400 | 12,360,028 | |
| Canadian Natural Resources Ltd. | 375,600 | 10,771,423 | |
| Carrizo Oil & Gas, Inc. (a) | 314,400 | 10,233,720 | |
| Centennial Resource Development, Inc. Class A (c) | 38,300 | 720,423 | |
| Chesapeake Energy Corp. (a)(b) | 138,300 | 753,735 | |
| Cimarex Energy Co. | 140,200 | 17,625,944 | |
| Concho Resources, Inc. (a) | 98,400 | 13,033,080 | |
| Continental Resources, Inc. (a)(b) | 268,100 | 12,118,120 | |
| Devon Energy Corp. | 261,400 | 11,334,304 | |
| Diamondback Energy, Inc. (a) | 313,600 | 31,629,696 | |
| Encana Corp. | 1,467,300 | 16,261,599 | |
| EOG Resources, Inc. | 568,300 | 55,119,420 | |
| Extraction Oil & Gas, Inc. | 520,347 | 9,210,142 | |
| Hess Corp. | 66,000 | 3,395,040 | |
| Jones Energy, Inc. (a)(b) | 180,370 | 577,184 | |
| Marathon Oil Corp. | 825,900 | 13,214,400 | |
| Newfield Exploration Co. (a) | 315,800 | 11,514,068 | |
| Noble Energy, Inc. | 317,300 | 11,552,893 | |
| Oasis Petroleum, Inc. (a) | 409,300 | 5,795,688 | |
| Parsley Energy, Inc. Class A (a) | 544,600 | 16,550,394 | |
| PDC Energy, Inc. (a) | 184,000 | 12,436,560 | |
| Pioneer Natural Resources Co. | 173,900 | 32,340,183 | |
| PrairieSky Royalty Ltd. | 8,038 | 187,969 | |
| QEP Resources, Inc. (a) | 426,500 | 5,868,640 | |
| Range Resources Corp. | 57,800 | 1,596,436 | |
| Resolute Energy Corp. (a)(b) | 118,957 | 5,537,448 | |
| Rice Energy, Inc. (a) | 1,018,099 | 18,987,546 | |
| Ring Energy, Inc. (a) | 313,900 | 3,879,804 | |
| RSP Permian, Inc. (a) | 411,500 | 16,250,135 | |
| Sanchez Energy Corp. (a)(b) | 361,600 | 4,158,400 | |
| Seven Generations Energy Ltd. (a) | 425,700 | 7,887,725 | |
| SM Energy Co. | 478,900 | 11,804,885 | |
| Viper Energy Partners LP | 177,100 | 3,152,380 | |
| Whiting Petroleum Corp. (a) | 713,900 | 7,745,815 | |
| WPX Energy, Inc. (a) | 725,600 | 9,360,240 | |
| 437,988,687 | |||
| Oil & Gas Refining & Marketing - 7.5% | |||
| Alon U.S.A. Energy, Inc. | 226,200 | 2,750,592 | |
| Delek U.S. Holdings, Inc. | 267,230 | 6,432,226 | |
| HollyFrontier Corp. | 148,700 | 4,353,936 | |
| Keyera Corp. (b) | 269,000 | 7,920,938 | |
| Marathon Petroleum Corp. | 395,200 | 19,601,920 | |
| Phillips 66 Co. | 220,716 | 17,257,784 | |
| Western Refining, Inc. | 169,700 | 6,197,444 | |
| World Fuel Services Corp. | 110,920 | 4,011,976 | |
| 68,526,816 | |||
| Oil & Gas Storage & Transport - 7.9% | |||
| Cheniere Energy Partners LP Holdings LLC | 162,100 | 3,943,893 | |
| Enable Midstream Partners LP | 88,600 | 1,445,952 | |
| GasLog Partners LP | 110,000 | 2,618,000 | |
| Gener8 Maritime, Inc. (a) | 267,932 | 1,307,508 | |
| Golar LNG Ltd. (b) | 175,400 | 4,790,174 | |
| Kinder Morgan, Inc. | 486,100 | 10,358,791 | |
| Noble Midstream Partners LP | 112,100 | 5,448,060 | |
| Plains All American Pipeline LP | 378,600 | 12,145,488 | |
| Rice Midstream Partners LP | 274,000 | 6,743,140 | |
| Targa Resources Corp. | 191,600 | 10,825,400 | |
| Teekay LNG Partners LP | 50,500 | 944,350 | |
| The Williams Companies, Inc. | 416,400 | 11,800,775 | |
| 72,371,531 | |||
| TOTAL OIL, GAS & CONSUMABLE FUELS | 629,741,743 | ||
| TOTAL COMMON STOCKS | |||
| (Cost $796,771,390) | 906,889,100 | ||
| Money Market Funds - 3.0% | |||
| Fidelity Cash Central Fund, 0.60% (d) | 863,466 | 863,638 | |
| Fidelity Securities Lending Cash Central Fund 0.62% (d)(e) | 26,340,956 | 26,346,225 | |
| TOTAL MONEY MARKET FUNDS | |||
| (Cost $27,204,702) | 27,209,863 | ||
| TOTAL INVESTMENT PORTFOLIO - 102.4% | |||
| (Cost $823,976,092) | 934,098,963 | ||
| NET OTHER ASSETS (LIABILITIES) - (2.4)% | (22,009,367) | ||
| NET ASSETS - 100% | $912,089,596 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Restricted securities - Investment in securities not registered under the Securities Act of 1933 (excluding 144A issues). At the end of the period, the value of restricted securities (excluding 144A issues) amounted to $720,423 or 0.1% of net assets.
(d) Affiliated fund that is generally available only to investment companies and other accounts managed by Fidelity Investments. The rate quoted is the annualized seven-day yield of the fund at period end. A complete unaudited listing of the fund's holdings as of its most recent quarter end is available upon request. In addition, each Fidelity Central Fund's financial statements, which are not covered by the Fund's Report of Independent Registered Public Accounting Firm, are available on the SEC's website or upon request.
(e) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
| Security | Acquisition Date | Acquisition Cost |
| Centennial Resource Development, Inc. Class A | 10/11/16 | $383,000 |
Affiliated Central Funds
Information regarding fiscal year to date income earned by the Fund from investments in Fidelity Central Funds is as follows:
| Fund | Income earned |
| Fidelity Cash Central Fund | $42,381 |
| Fidelity Securities Lending Cash Central Fund | 294,978 |
| Total | $337,359 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2017, involving the Fund's assets and liabilities carried at fair value. The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities. For more information on valuation inputs, and their aggregation into the levels used below, please refer to the Investment Valuation section in the accompanying Notes to Financial Statements.
| Valuation Inputs at Reporting Date: | ||||
| Description | Total | Level 1 | Level 2 | Level 3 |
| Investments in Securities: | ||||
| Common Stocks | $906,889,101 | $905,809,783 | $1,079,318 | $-- |
| Money Market Funds | 27,209,862 | 27,209,862 | -- | -- |
| Total Investments in Securities: | $934,098,963 | $933,019,645 | $1,079,318 | $-- |
Other Information
Distribution of investments by country or territory of incorporation, as a percentage of Total Net Assets, is as follows (Unaudited):
| United States of America | 82.4% |
| Canada | 9.0% |
| Curacao | 3.7% |
| Netherlands | 1.6% |
| Bailiwick of Jersey | 1.3% |
| Others (Individually Less Than 1%) | 2.0% |
| 100.0% |
See accompanying notes which are an integral part of the financial statements.
Natural Resources Portfolio
Financial Statements
Statement of Assets and Liabilities
| February 28, 2017 | ||
| Assets | ||
| Investment in securities, at value (including securities loaned of $25,697,376) — See accompanying schedule: Unaffiliated issuers (cost $796,771,390) | $906,889,100 | |
| Fidelity Central Funds (cost $27,204,702) | 27,209,863 | |
| Total Investments (cost $823,976,092) | $934,098,963 | |
| Cash | 91,312 | |
| Receivable for investments sold | 7,525,331 | |
| Receivable for fund shares sold | 893,955 | |
| Dividends receivable | 1,174,231 | |
| Distributions receivable from Fidelity Central Funds | 25,406 | |
| Prepaid expenses | 2,943 | |
| Other receivables | 48,380 | |
| Total assets | 943,860,521 | |
| Liabilities | ||
| Payable for investments purchased | $2,385,580 | |
| Payable for fund shares redeemed | 2,272,594 | |
| Accrued management fee | 432,172 | |
| Other affiliated payables | 205,712 | |
| Other payables and accrued expenses | 138,031 | |
| Collateral on securities loaned | 26,336,836 | |
| Total liabilities | 31,770,925 | |
| Net Assets | $912,089,596 | |
| Net Assets consist of: | ||
| Paid in capital | $983,195,001 | |
| Distributions in excess of net investment income | (772,686) | |
| Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | (180,391,521) | |
| Net unrealized appreciation (depreciation) on investments and assets and liabilities in foreign currencies | 110,058,802 | |
| Net Assets, for 31,315,942 shares outstanding | $912,089,596 | |
| Net Asset Value, offering price and redemption price per share ($912,089,596 ÷ 31,315,942 shares) | $29.13 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
| Year ended February 28, 2017 | ||
| Investment Income | ||
| Dividends | $9,497,592 | |
| Income from Fidelity Central Funds (including $294,978 from security lending) | 337,359 | |
| Total income | 9,834,951 | |
| Expenses | ||
| Management fee | $4,578,314 | |
| Transfer agent fees | 1,951,808 | |
| Accounting and security lending fees | 294,232 | |
| Custodian fees and expenses | 35,045 | |
| Independent trustees' fees and expenses | 17,512 | |
| Registration fees | 66,665 | |
| Audit | 51,656 | |
| Legal | 10,189 | |
| Miscellaneous | 9,767 | |
| Total expenses before reductions | 7,015,188 | |
| Expense reductions | (73,932) | 6,941,256 |
| Net investment income (loss) | 2,893,695 | |
| Realized and Unrealized Gain (Loss) | ||
| Net realized gain (loss) on: | ||
| Investment securities: | ||
| Unaffiliated issuers | 18,101,611 | |
| Fidelity Central Funds | 7,229 | |
| Foreign currency transactions | 6,533 | |
| Total net realized gain (loss) | 18,115,373 | |
| Change in net unrealized appreciation (depreciation) on: Investment securities (net of increase in deferred foreign taxes of $62,986) | 176,627,677 | |
| Assets and liabilities in foreign currencies | (1,261) | |
| Total change in net unrealized appreciation (depreciation) | 176,626,416 | |
| Net gain (loss) | 194,741,789 | |
| Net increase (decrease) in net assets resulting from operations | $197,635,484 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
| Year ended February 28, 2017 | Year ended February 29, 2016 | |
| Increase (Decrease) in Net Assets | ||
| Operations | ||
| Net investment income (loss) | $2,893,695 | $4,105,693 |
| Net realized gain (loss) | 18,115,373 | (160,381,666) |
| Change in net unrealized appreciation (depreciation) | 176,626,416 | (56,066,991) |
| Net increase (decrease) in net assets resulting from operations | 197,635,484 | (212,342,964) |
| Distributions to shareholders from net investment income | (3,359,511) | (3,939,288) |
| Distributions to shareholders from net realized gain | (2,074,553) | – |
| Total distributions | (5,434,064) | (3,939,288) |
| Share transactions | ||
| Proceeds from sales of shares | 495,662,532 | 117,724,498 |
| Reinvestment of distributions | 5,196,216 | 3,714,770 |
| Cost of shares redeemed | (243,885,913) | (203,387,401) |
| Net increase (decrease) in net assets resulting from share transactions | 256,972,835 | (81,948,133) |
| Redemption fees | 46,019 | 21,844 |
| Total increase (decrease) in net assets | 449,220,274 | (298,208,541) |
| Net Assets | ||
| Beginning of period | 462,869,322 | 761,077,863 |
| End of period | $912,089,596 | $462,869,322 |
| Other Information | ||
| Distributions in excess of net investment income end of period | $(772,686) | $(178,509) |
| Shares | ||
| Sold | 18,462,591 | 4,300,582 |
| Issued in reinvestment of distributions | 185,868 | 161,442 |
| Redeemed | (8,562,319) | (7,401,435) |
| Net increase (decrease) | 10,086,140 | (2,939,411) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights — Natural Resources Portfolio
| Years ended February 28, | 2017 | 2016 A | 2015 | 2014 | 2013 |
| Selected Per–Share Data | |||||
| Net asset value, beginning of period | $21.80 | $31.49 | $37.85 | $34.10 | $35.36 |
| Income from Investment Operations | |||||
| Net investment income (loss)B | .10 | .18 | .21 | .20 | .28 |
| Net realized and unrealized gain (loss) | 7.42 | (9.69) | (4.55) | 4.52 | (1.45) |
| Total from investment operations | 7.52 | (9.51) | (4.34) | 4.72 | (1.17) |
| Distributions from net investment income | (.11) | (.18) | (.15) | (.10) | (.09) |
| Distributions from net realized gain | (.08) | – | (1.87) | (.88) | – |
| Total distributions | (.19) | (.18) | (2.02) | (.97)C | (.09) |
| Redemption fees added to paid in capitalB,D | – | – | – | – | – |
| Net asset value, end of period | $29.13 | $21.80 | $31.49 | $37.85 | $34.10 |
| Total ReturnE | 34.54% | (30.22)% | (11.45)% | 13.97% | (3.30)% |
| Ratios to Average Net AssetsF,G | |||||
| Expenses before reductions | .84% | .86% | .82% | .84% | .86% |
| Expenses net of fee waivers, if any | .84% | .86% | .82% | .84% | .85% |
| Expenses net of all reductions | .83% | .85% | .82% | .83% | .84% |
| Net investment income (loss) | .35% | .66% | .55% | .54% | .89% |
| Supplemental Data | |||||
| Net assets, end of period (000 omitted) | $912,090 | $462,869 | $761,078 | $949,394 | $1,054,528 |
| Portfolio turnover rateH | 84% | 78% | 87% | 99% | 76% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Total distributions of $.97 per share is comprised of distributions from net investment income of $.095 and distributions from net realized gain of $.877 per share.
D Amount represents less than $.005 per share.
E Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
F Fees and expenses of any underlying Fidelity Central Funds are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of the expenses of any underlying Fidelity Central Funds.
G Expense ratios reflect operating expenses of the Fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or reductions from other expense offset arrangements and do not represent the amount paid by the Fund during periods when reimbursements or reductions occur. Expenses net of fee waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the Fund.
H Amount does not include the portfolio activity of any underlying Fidelity Central Funds.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2017
1. Organization.
Energy Portfolio, Energy Service Portfolio, Natural Gas Portfolio, and Natural Resources Portfolio (the Funds) are funds of Fidelity Select Portfolios (the Trust). Energy Portfolio, Energy Service Portfolio and Natural Gas Portfolio are non-diversified funds. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Each Fund is authorized to issue an unlimited number of shares. Share transactions on the Statement of Changes in Net Assets may contain exchanges between affiliated funds. The Natural Resources Portfolio may also invest in certain precious metals. Certain Funds investments in emerging markets can be subject to social, economic, regulatory, and political uncertainties and can be extremely volatile.
2. Investments in Fidelity Central Funds.
The Funds invests in Fidelity Central Funds, which are open-end investment companies generally available only to other investment companies and accounts managed by the investment adviser and its affiliates. The Funds' Schedules of Investments list each of the Fidelity Central Funds held as of period end, if any, as an investment of each Fund, but do not include the underlying holdings of each Fidelity Central Fund. As an Investing Fund, each Fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
The Money Market Central Funds seek preservation of capital and current income and are managed by Fidelity Investments Money Management, Inc. (FIMM), an affiliate of the investment adviser. Annualized expenses of the Money Market Central Funds as of their most recent shareholder report date are less than .005%.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission (the SEC) website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds, which are not covered by the Funds' Report of Independent Registered Public Accounting Firm, are available on the SEC website or upon request.
3. Significant Accounting Policies.
The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), which require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. Subsequent events, if any, through the date that the financial statements were issued have been evaluated in the preparation of the financial statements. The following summarizes the significant accounting policies of the Funds:
Investment Valuation. Investments are valued as of 4:00 p.m. Eastern time on the last calendar day of the period. The Board of Trustees (the Board) has delegated the day to day responsibility for the valuation of each Fund's investments to the Fair Value Committee (the Committee) established by each Fund's investment adviser. In accordance with valuation policies and procedures approved by the Board, each Fund attempts to obtain prices from one or more third party pricing vendors or brokers to value its investments. When current market prices, quotations or currency exchange rates are not readily available or reliable, investments will be fair valued in good faith by the Committee, in accordance with procedures adopted by the Board. Factors used in determining fair value vary by investment type and may include market or investment specific events. The frequency with which these procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee oversees each Fund's valuation policies and procedures and reports to the Board on the Committee's activities and fair value determinations. The Board monitors the appropriateness of the procedures used in valuing each Fund's investments and ratifies the fair value determinations of the Committee.
Each Fund categorizes the inputs to valuation techniques used to value its investments into a disclosure hierarchy consisting of three levels as shown below:
- Level 1 – quoted prices in active markets for identical investments
- Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, etc.)
- Level 3 – unobservable inputs (including the Fund's own assumptions based on the best information available)
Valuation techniques used to value each Fund's investments by major category are as follows:
Equity securities, including restricted securities, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by a third party pricing vendor on the primary market or exchange on which they are traded and are categorized as Level 1 in the hierarchy. In the event there were no sales during the day or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are generally categorized as Level 2 in the hierarchy. For foreign equity securities, when market or security specific events arise, comparisons to the valuation of American Depositary Receipts (ADRs), futures contracts, Exchange-Traded Funds (ETFs) and certain indexes as well as quoted prices for similar securities may be used and would be categorized as Level 2 in the hierarchy. Utilizing these techniques may result in transfers between Level 1 and Level 2. For equity securities, including restricted securities, where observable inputs are limited, assumptions about market activity and risk are used and these securities may be categorized as Level 3 in the hierarchy. Equity securities, including restricted securities, for which observable inputs are not available are valued using alternate valuation approaches, including the market approach and the income approach and are categorized as Level 3 in the hierarchy. The market approach generally consists of using comparable market transactions while the income approach generally consists of using the net present value of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors.
Investments in open-end mutual funds, including the Fidelity Central Funds, are valued at their closing net asset value (NAV) each business day and are categorized as Level 1 in the hierarchy.
Changes in valuation techniques may result in transfers in or out of an assigned level within the disclosure hierarchy. The aggregate value of investments by input level as of February 28, 2017 is included at the end of each applicable Fund's Schedule of Investments.
Foreign Currency. The Funds may use foreign currency contracts to facilitate transactions in foreign-denominated securities. Gains and losses from these transactions may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contracts' terms.
Foreign-denominated assets, including investment securities, and liabilities are translated into U.S. dollars at the exchange rates at period end. Purchases and sales of investment securities, income and dividends received and expenses denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.
The effects of exchange rate fluctuations on investments are included with the net realized and unrealized gain (loss) on investment securities. Other foreign currency transactions resulting in realized and unrealized gain (loss) are disclosed separately.
Investment Transactions and Income. For financial reporting purposes, the Funds' investment holdings and NAV include trades executed through the end of the last business day of the period. The NAV per share for processing shareholder transactions is calculated as of the close of business of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern time and includes trades executed through the end of the prior business day. Gains and losses on securities sold are determined on the basis of identified cost and may include proceeds received from litigation. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the Funds are informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Income and capital gain distributions from Fidelity Central Funds, if any, are recorded on the ex-dividend date. Certain distributions received by the Funds represent a return of capital or capital gain. The Funds determine the components of these distributions subsequent to the ex-dividend date, based upon receipt of tax filings or other correspondence relating to the underlying investment. These distributions are recorded as a reduction of cost of investments and/or as a realized gain. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain.
Expenses. Expenses directly attributable to a fund are charged to that fund. Expenses attributable to more than one fund are allocated among the respective funds on the basis of relative net assets or other appropriate methods. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
Deferred Trustee Compensation. Under a Deferred Compensation Plan (the Plan) for the Funds, independent Trustees may elect to defer receipt of a portion of their annual compensation. Deferred amounts are invested in a cross-section of Fidelity funds, are marked-to-market and remain in the Fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees are included in the accompanying Statement of Assets and Liabilities.
Income Tax Information and Distributions to Shareholders. Each year, each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code, including distributing substantially all of its taxable income and realized gains. As a result, no provision for U.S. Federal income taxes is required. As of February 28, 2017, each Fund did not have any unrecognized tax benefits in the financial statements; nor is each Fund aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Each Fund files a U.S. federal tax return, in addition to state and local tax returns as required. Each Fund's federal income tax returns are subject to examination by the Internal Revenue Service (IRS) for a period of three fiscal years after they are filed. State and local tax returns may be subject to examination for an additional fiscal year depending on the jurisdiction. Foreign taxes are provided for based on each Fund's understanding of the tax rules and rates that exist in the foreign markets in which it invests. An estimated deferred tax liability for net unrealized appreciation on the applicable securities is included in Other payables and accrued expenses on each applicable Fund's Statement of Assets & Liabilities.
Distributions are declared and recorded on the ex-dividend date. Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. In addition, certain funds claimed a portion of the payment made to redeeming shareholders as a distribution for income tax purposes.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Capital accounts are not adjusted for temporary book-tax differences which will reverse in a subsequent period.
Book-tax differences are primarily due to foreign currency transactions, passive foreign investment companies (PFIC), partnerships, deferred trustees compensation, redemptions in-kind, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
The federal tax cost of investment securities and unrealized appreciation (depreciation) as of period end were as follows for each Fund:
| Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) on securities | |
| Energy Portfolio | $1,967,872,125 | $445,430,274 | $(97,396,160) | $348,034,114 |
| Energy Service Portfolio | 749,445,000 | 127,865,482 | (105,870,345) | 21,995,137 |
| Natural Gas Portfolio | 584,501,022 | 24,645,803 | (113,924,930) | (89,279,127) |
| Natural Resources Portfolio | 831,061,051 | 158,060,573 | (55,022,661) | 103,037,912 |
The tax-based components of distributable earnings as of period end were as follows for each Fund:
| Undistributed ordinary income | Capital loss carryforward | Net unrealized appreciation (depreciation) on securities and other investments | |
| Energy Portfolio | $4,952,693 | $(329,812,583) | $342,640,615 |
| Energy Service Portfolio | – | (28,813,113) | 21,667,988 |
| Natural Gas Portfolio | 1,303,932 | (445,707,938) | (93,171,016) |
| Natural Resources Portfolio | 669,784 | (173,976,347) | 102,300,328 |
The Energy Services Portfolio intends to elect to defer to its next fiscal year $35,306 of ordinary losses recognized during the period January 1, 2017 to February 28, 2017.
Capital loss carryforwards are only available to offset future capital gains of the Funds to the extent provided by regulations and may be limited. Under the Regulated Investment Company Modernization Act of 2010 (the Act), the Funds are permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period and such capital losses are required to be used prior to any losses that expire. The capital loss carryforward information presented below, including any applicable limitation, is estimated as of fiscal period end and is subject to adjustment.
| Fiscal year of expiration | |||
| 2018 | 2019 | Total with expiration | |
| Natural Gas Portfolio | $(60,545,261) | $(215,752,708) | $(276,297,969) |
| No expiration | ||||
| Short-term | Long-term | Total no expiration | Total capital loss carryfoward | |
| Energy Portfolio | $(184,858,560) | $(144,954,023) | $(329,812,583) | $(329,812,583) |
| Energy Service Portfolio | – | (28,813,113) | (28,813,113) | (28,813,113) |
| Natural Gas Portfolio | (48,906,799) | (120,503,170) | (169,409,969) | (445,707,938) |
| Natural Resources Portfolio | (70,283,311) | (103,693,036) | (173,976,347) | (173,976,347) |
The tax character of distributions paid was as follows:
| February 28, 2017 | |
| Ordinary Income | |
| Energy Portfolio | $16,227,405 |
| Energy Service Portfolio | 2,569,509 |
| Natural Gas Portfolio | 3,106,750 |
| Natural Resources Portfolio | 5,434,064 |
| February 29, 2016 | |||
| Ordinary Income | Long-term Capital Gains | Total | |
| Energy Portfolio | $19,169,416 | $3,157,395 | $22,326,811 |
| Energy Service Portfolio | 4,585,495 | – | 4,585,495 |
| Natural Gas Portfolio | 5,529,387 | – | 5,529,387 |
| Natural Resources Portfolio | 3,939,288 | – | 3,939,288 |
Trading (Redemption) Fees. Shares held by investors in the Funds less than 30 days may be subject to a redemption fee equal to .75% of the NAV of shares redeemed. All redemption fees, which reduce the proceeds of the shareholder redemption, are retained by the Funds and accounted for as an addition to paid in capital. In November 2016, the Board of Trustees approved the elimination of these redemption fees effective December 12, 2016 for Energy Portfolio.
Restricted Securities. The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities is included at the end of each applicable Fund's Schedule of Investments.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, are noted in the table below.
| Purchases ($) | Sales ($) | |
| Energy Portfolio | 2,196,437,102 | 2,346,034,891 |
| Energy Service Portfolio | 643,972,378 | 528,036,092 |
| Natural Gas Portfolio | 389,782,620 | 309,476,395 |
| Natural Resources Portfolio | 936,582,873 | 682,035,515 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity SelectCo, LLC (the investment adviser) and its affiliates provide the Funds with investment management related services for which the Funds pay a monthly management fee. The management fee is the sum of an individual fund fee rate and an annualized group fee rate. The individual fund fee rate is applied to each Fund's average net assets. The group fee rate is based upon the average net assets of all the mutual funds advised by Fidelity Management & Research Company (FMR) and the investment adviser. The group fee rate decreases as assets under management increase and increases as assets under management decrease. For the reporting period, each Fund's annual management fee rate expressed as a percentage of each Fund's average net assets was as follows:
| Individual Rate | Group Rate | Total | |
| Energy Portfolio | .30% | .25% | .55% |
| Energy Service Portfolio | .30% | .25% | .55% |
| Natural Gas Portfolio | .30% | .25% | .55% |
| Natural Resources Portfolio | .30% | .25% | .55% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company, Inc. (FIIOC), an affiliate of the investment adviser, is the Funds' transfer, dividend disbursing and shareholder servicing agent. FIIOC receives account fees and asset-based fees that vary according to account size and type of account. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were equivalent to the following annual rates expressed as a percentage of average net assets:
| Energy Portfolio | .20% |
| Energy Service Portfolio | .23% |
| Natural Gas Portfolio | .25% |
| Natural Resources Portfolio | .23% |
Accounting and Security Lending Fees. Fidelity Service Company, Inc. (FSC), an affiliate of the investment adviser, maintains each Fund's accounting records. The accounting fee is based on the level of average net assets for each month. Under a separate contract, FSC administers the security lending program. The security lending fee is based on the number and duration of lending transactions.
Brokerage Commissions. Certain Funds placed a portion of their portfolio transactions with brokerage firms which are affiliates of the investment adviser. Brokerage commissions are included in net realized gain (loss) and change in net unrealized appreciation (depreciation) in the Statement of Operations. The commissions paid to these affiliated firms were as follows:
| Amount | |
| Energy Portfolio | $80,792 |
| Energy Service Portfolio | 37,733 |
| Natural Gas Portfolio | 10,387 |
| Natural Resources Portfolio | 36,346 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the SEC, the Funds, along with other registered investment companies having management contracts with Fidelity Management & Research Company (FMR) or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the funds to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. Each applicable fund's activity in this program during the period for which loans were outstanding was as follows:
| Borrower or Lender | Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Energy Portfolio | Borrower | $12,015,389 | .72% | $4,314 |
| Energy Service Portfolio | Borrower | $2,647,778 | .62% | $824 |
| Natural Gas Portfolio | Borrower | $5,797,000 | .60% | $97 |
Interfund Trades. The Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note.
Redemptions In-Kind. During the period, 3,526,343 shares of Energy Portfolio held by an affiliated entity were redeemed in-kind for investments and cash with a value of $146,061,109. The net realized gain of $45,915,372 on investments delivered through in-kind redemptions is included in the accompanying Statement of Operations. The amount of in-kind redemptions is included in share transactions in the accompanying Statement of Changes in Net Assets. Energy Portfolio recognized no gain or loss for federal income tax purposes.
6. Committed Line of Credit.
Certain Funds participate with other funds managed by the investment adviser or an affiliate in a $4.25 billion credit facility (the "line of credit") to be utilized for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity purposes. The participating funds have agreed to pay commitment fees on their pro-rata portion of the line of credit, which are reflected in Miscellaneous expenses on the Statement of Operations, and are as follows:
| Energy Portfolio | $6,959 |
| Energy Service Portfolio | 1,521 |
| Natural Gas Portfolio | 1,170 |
| Natural Resources Portfolio | 2,336 |
During the period, the Funds did not borrow on this line of credit.
7. Security Lending.
Certain Funds lend portfolio securities through a lending agent from time to time in order to earn additional income. On the settlement date of the loan, each applicable Fund receives collateral (in the form of U.S. Treasury obligations, letters of credit and/or cash) against the loaned securities and maintains collateral in an amount not less than 100% of the market value of the loaned securities during the period of the loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Funds on the next business day. The Funds or borrower may terminate the loan at any time, and if the borrower defaults on its obligation to return the securities loaned because of insolvency or other reasons, the Funds may apply collateral received from the borrower against the obligation. The Funds may experience delays and costs in recovering the securities loaned. Any cash collateral received is invested in the Fidelity Securities Lending Cash Central Fund. The value of loaned securities and cash collateral at period end are disclosed on each applicable Fund's Statement of Assets and Liabilities. Security lending income represents the income earned on investing cash collateral, less rebates paid to borrowers and any lending agent fees associated with the loan, plus any premium payments received for lending certain types of securities. Security lending income is presented on each applicable Fund's Statement of Operations as a component of income from Fidelity Central Funds.
8. Bank Borrowings.
Each Fund is permitted to have bank borrowings for temporary or emergency purposes to fund shareholder redemptions or for other short-term liquidity requirements. Each Fund has established borrowing arrangements with certain banks. The interest rate on the borrowings is the bank's base rate, as revised from time to time. At period end, there were no bank borrowings outstanding. Each applicable Fund's activity in this program during the period for which loans were outstanding was as follows:
| Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
| Energy Service Portfolio | $1,510,000 | .91% | $76 |
9. Expense Reductions.
Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of Certain Funds include an amount in addition to trade execution, which may be rebated back to the Funds to offset certain expenses. In addition, through arrangements with each applicable Fund's custodian, credits realized as a result of certain uninvested cash balances were used to reduce each applicable Fund's expenses. All of the applicable expense reductions are noted in the table below.
| Brokerage Service reduction | Custody expense reduction | |
| Energy Portfolio | $235,055 | $346 |
| Energy Service Portfolio | 50,330 | – |
| Natural Gas Portfolio | 27,390 | – |
| Natural Resources Portfolio | 67,144 | – |
In addition, during the period the investment adviser reimbursed and/or waived a portion of operating expenses as follows:
| Amount | |
| Energy Portfolio | $19,439 |
| Energy Service Portfolio | 4,920 |
| Natural Gas Portfolio | 3,730 |
| Natural Resources Portfolio | 6,788 |
10. Other.
The Funds' organizational documents provide former and current trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, the Funds may also enter into contracts that provide general indemnifications. The Funds' maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Funds. The risk of material loss from such claims is considered remote.
Mutual Funds managed by the investment adviser or its affiliates, in aggregate, were the owners of record of more than 20% of the total outstanding shares of the following Fund:
| % of Shares held | |
| Energy Portfolio | 20% |
Report of Independent Registered Public Accounting Firm
To the Trustees of Fidelity Select Portfolios and the Shareholders of Energy Portfolio, Energy Service Portfolio, Natural Gas Portfolio and Natural Resources Portfolio:
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Energy Portfolio, Energy Service Portfolio, Natural Gas Portfolio and Natural Resources Portfolio (each a fund of Fidelity Select Portfolios) (the "Funds") as of February 28, 2017, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of February 28, 2017 by correspondence with the custodians and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
April 13, 2017
Trustees and Officers
The Trustees, Members of the Advisory Board (if any), and officers of the trust and funds, as applicable, are listed below. The Board of Trustees governs each fund and is responsible for protecting the interests of shareholders. The Trustees are experienced executives who meet periodically throughout the year to oversee each fund's activities, review contractual arrangements with companies that provide services to each fund, oversee management of the risks associated with such activities and contractual arrangements, and review each fund's performance. Each of the Trustees oversees 90 funds.
The Trustees hold office without limit in time except that (a) any Trustee may resign; (b) any Trustee may be removed by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal; (c) any Trustee who requests to be retired or who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) any Trustee may be removed at any special meeting of shareholders by a two-thirds vote of the outstanding voting securities of the trust. Each Trustee who is not an interested person (as defined in the 1940 Act) of the trust and the funds is referred to herein as an Independent Trustee. Each Independent Trustee shall retire not later than the last day of the calendar year in which his or her 75th birthday occurs. The Independent Trustees may waive this mandatory retirement age policy with respect to individual Trustees. Officers and Advisory Board Members hold office without limit in time, except that any officer or Advisory Board Member may resign or may be removed by a vote of a majority of the Trustees at any regular meeting or any special meeting of the Trustees. Except as indicated, each individual has held the office shown or other offices in the same company for the past five years.
Each fund’s Statement of Additional Information (SAI) includes more information about the Trustees. To request a free copy, call Fidelity at 1-800-544-8544.
Experience, Skills, Attributes, and Qualifications of the Trustees. The Governance and Nominating Committee has adopted a statement of policy that describes the experience, qualifications, attributes, and skills that are necessary and desirable for potential Independent Trustee candidates (Statement of Policy). The Board believes that each Trustee satisfied at the time he or she was initially elected or appointed a Trustee, and continues to satisfy, the standards contemplated by the Statement of Policy. The Governance and Nominating Committee also engages professional search firms to help identify potential Independent Trustee candidates who have the experience, qualifications, attributes, and skills consistent with the Statement of Policy. From time to time, additional criteria based on the composition and skills of the current Independent Trustees, as well as experience or skills that may be appropriate in light of future changes to board composition, business conditions, and regulatory or other developments, have also been considered by the professional search firms and the Governance and Nominating Committee. In addition, the Board takes into account the Trustees' commitment and participation in Board and committee meetings, as well as their leadership of standing and ad hoc committees throughout their tenure.
In determining that a particular Trustee was and continues to be qualified to serve as a Trustee, the Board has considered a variety of criteria, none of which, in isolation, was controlling. The Board believes that, collectively, the Trustees have balanced and diverse experience, qualifications, attributes, and skills, which allow the Board to operate effectively in governing each fund and protecting the interests of shareholders. Information about the specific experience, skills, attributes, and qualifications of each Trustee, which in each case led to the Board's conclusion that the Trustee should serve (or continue to serve) as a trustee of the funds, is provided below.
Board Structure and Oversight Function. Brian B. Hogan is an interested person and currently serves as Chairman. The Trustees have determined that an interested Chairman is appropriate and benefits shareholders because an interested Chairman has a personal and professional stake in the quality and continuity of services provided to the funds. Independent Trustees exercise their informed business judgment to appoint an individual of their choosing to serve as Chairman, regardless of whether the Trustee happens to be independent or a member of management. The Independent Trustees have determined that they can act independently and effectively without having an Independent Trustee serve as Chairman and that a key structural component for assuring that they are in a position to do so is for the Independent Trustees to constitute a substantial majority for the Board. The Independent Trustees also regularly meet in executive session. Michael E. Wiley serves as Chairman of the Independent Trustees and as such (i) acts as a liaison between the Independent Trustees and management with respect to matters important to the Independent Trustees and (ii) with management prepares agendas for Board meetings.
Fidelity® funds are overseen by different Boards of Trustees. The funds' Board oversees Fidelity's sector portfolios. Other Boards oversee Fidelity's equity and high income funds, and Fidelity's investment grade bond, money market, and asset allocation funds. The use of separate Boards, each with its own committee structure, allows the Trustees of each group of Fidelity® funds to focus on the unique issues of the funds they oversee, including common research, investment, and operational issues. On occasion, the separate Boards establish joint committees to address issues of overlapping consequences for the Fidelity® funds overseen by each Board.
The Trustees operate using a system of committees to facilitate the timely and efficient consideration of all matters of importance to the Trustees, each fund, and fund shareholders and to facilitate compliance with legal and regulatory requirements and oversight of the funds' activities and associated risks. The Board, acting through its committees, has charged SelectCo and its affiliates with (i) identifying events or circumstances the occurrence of which could have demonstrably adverse effects on the funds' business and/or reputation; (ii) implementing processes and controls to lessen the possibility that such events or circumstances occur or to mitigate the effects of such events or circumstances if they do occur; and (iii) creating and maintaining a system designed to evaluate continuously business and market conditions in order to facilitate the identification and implementation processes described in (i) and (ii) above. Because the day-to-day operations and activities of the funds are carried out by or through SelectCo, its affiliates, and other service providers, the funds' exposure to risks is mitigated but not eliminated by the processes overseen by the Trustees. While each of the Board's committees has responsibility for overseeing different aspects of the funds' activities, oversight is exercised primarily through the Operations and Audit Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), SelectCo's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate. The responsibilities of each standing committee, including their oversight responsibilities, are described further under "Standing Committees of the Trustees."
Interested Trustees*:
Correspondence intended for a Trustee who is an interested person may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
Brian B. Hogan (1964)
Year of Election or Appointment: 2014
Trustee
Chairman of the Board of Trustees
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
* Determined to be an "Interested Trustee" by virtue of, among other things, his or her affiliation with the trust or various entities under common control with SelectCo.
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Independent Trustees:
Correspondence intended for an Independent Trustee may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235.
Name, Year of Birth; Principal Occupations and Other Relevant Experience+
David A. Rosow (1942)
Year of Election or Appointment: 2013
Trustee
Mr. Rosow also serves as Trustee of other Fidelity® funds. Prior to his retirement in 2006, Mr. Rosow was the Chief Executive Officer, owner and operator of a number of private companies, which encompassed the oil refining, drilling and marketing of petroleum products (including specialty petroleum products), recreation industry, and real estate development. Mr. Rosow currently serves as a Director of Oxbow Carbon LLC (upgraders, marketers, and distributors of petroleum byproducts of the oil refining process, 2015-present) and Oxbridge Academy of the Palm Beaches (2015-present) and serves as its President and CEO. Previously, Mr. Rosow served on the Fairfield Country Day School Board for 27 years, including as its President for 3 years, stepping down in 2006. Mr. Rosow served as Lead Director and Chairman of the Audit Committee of Hudson United Bancorp (1996-2006), Chairman of the Board of Westport Bank and Trust (1992-1996), and as a Director of TD Banknorth (2006-2007). In addition, Mr. Rosow served as a member (2008-2014) and President (2009-2014) of the Town Council of Palm Beach, Florida. Mr. Rosow also served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to Mr. Smith's retirement, he served as Chairman and Chief Executive Officer of Inbrand Corp. (manufacturer of personal absorbent products, 1990-1997). He also served as President (1986-1990) of Inbrand Corp. Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank. In addition, Mr. Smith served as a Member of the Advisory Board of certain Fidelity® funds (2012-2013) and as a board member of the Jackson Hole Land Trust (2009-2012).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Chairman of the Independent Trustees
Mr. Wiley also serves as Trustee of other Fidelity® funds. Mr. Wiley serves as a Director of Tesoro Corporation (independent oil refiner and marketer, 2005-present), a Director of Tesoro Logistics LP (natural resources logistics, 2015-present), and a Director of Bill Barrett Corporation (exploration and production, 2005-present). In addition, Mr. Wiley also serves as a Director of Post Oak Bank (privately-held bank, 2004-present). Previously, Mr. Wiley served as a Trustee of other Fidelity® funds (2008-2013), as a Director of Asia Pacific Exploration Consolidated (international oil and gas exploration and production, 2008-2013), as a member of the Board of Trustees of the University of Tulsa (2000-2006; 2007-2010), as a Senior Energy Advisor of Katzenbach Partners, LLC (consulting, 2006-2007), as an Advisory Director of Riverstone Holdings (private investment), Chairman, President, and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004), and as Director of Spinnaker Exploration Company (exploration and production, 2001-2005).
+ The information includes the Trustee's principal occupation during the last five years and other information relating to the experience, attributes, and skills relevant to the Trustee's qualifications to serve as a Trustee, which led to the conclusion that the Trustee should serve as a Trustee for each fund.
Advisory Board Members and Officers:
Correspondence intended for a Member of the Advisory Board may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Except for Anthony R. Rochte, correspondence intended for an officer may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Correspondence intended for Mr. Rochte may be sent to SelectCo, 1225 17th Street, Denver, Colorado 80202-5541. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Donald F. Donahue (1950)
Year of Election or Appointment: 2015
Member of the Advisory Board
Mr. Donahue also serves as a Trustee or Member of the Advisory Board of other Fidelity® funds. Mr. Donahue is President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 2012-present) and a consultant for the Institute for Defense Analyses (national security, 2012-present). Previously, Mr. Donahue served as Chief Executive Officer (2006-2012), Chief Operating Officer (2003-2006), and Managing Director, Customer Marketing and Development (1999-2003) of The Depository Trust & Clearing Corporation (financial markets infrastructure). Mr. Donahue serves as a Member (2012-present) and Co-Chairman (2016-present) of the Board of Directors of United Way of New York, Member of the Board of Directors of NYC Leadership Academy (2012-present) and Member of the Board of Advisors of Ripple Labs, Inc. (financial services, 2015-present). He also served as Chairman (2010-2012) and Member of the Board of Directors (2012-2013) of Omgeo, LLC (financial services), Treasurer of United Way of New York (2012-2016), and Member of the Board of Directors of XBRL US (financial services non-profit, 2009-2012) and the International Securities Services Association (2009-2012).
Carol B. Tomé (1957)
Year of Election or Appointment: 2017
Member of the Advisory Board
Ms. Tomé also serves as Trustee or Member of the Advisory Board of other Fidelity® funds. Ms. Tomé is Chief Financial Officer (2001-present) and Executive Vice President of Corporate Services (2007-present) of The Home Depot, Inc. (home improvement retailer) and a Director (2003-present) and Chair of the Audit Committee (2004-present) of United Parcel Service, Inc. (package delivery and supply chain management). Previously, Ms. Tomé served as Senior Vice President of Finance and Accounting/Treasurer (2000-2007) and Vice President and Treasurer (1995-2000) of The Home Depot, Inc. and Chair of the Board (2010-2012), Vice Chair of the Board (2009 and 2013), and a Director (2008-2013) of the Federal Reserve Bank of Atlanta. Ms. Tomé is also a director or trustee of many community and professional organizations.
Elizabeth Paige Baumann (1968)
Year of Election or Appointment: 2017
Interim Anti-Money Laundering (AML) Officer
Ms. Baumann also serves as AML Officer of other funds. She is Chief AML Officer (2012-present) and Senior Vice President (2014-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments. Previously, Ms. Baumann served as AML Officer of the funds (2012-2016), and Vice President (2007-2014) and Deputy Anti-Money Laundering Officer (2007-2012) of FMR LLC.
Marc R. Bryant (1966)
Year of Election or Appointment: 2013
Secretary and Chief Legal Officer (CLO)
Mr. Bryant also serves as Secretary and CLO of other funds. Mr. Bryant serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company (investment adviser firm, 2015-present) and FMR Co., Inc. (investment adviser firm, 2015-present); Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2015-present) and Fidelity Investments Money Management, Inc. (investment adviser firm, 2015-present); and CLO of Fidelity Management & Research (Hong Kong) Limited and FMR Investment Management (UK) Limited (investment adviser firms, 2015-present) and Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present). He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company). Previously, Mr. Bryant served as Secretary and CLO of Fidelity Rutland Square Trust II (2010-2014) and Assistant Secretary of Fidelity's Fixed Income and Asset Allocation Funds (2013-2015). Prior to joining Fidelity Investments, Mr. Bryant served as a Senior Vice President and the Head of Global Retail Legal for AllianceBernstein L.P. (2006-2010), and as the General Counsel for ProFund Advisors LLC (2001-2006).
Jeffrey S. Christian (1961)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Christian also serves as Assistant Treasurer of other funds. Mr. Christian is an employee of Fidelity Investments (2003-present).
William C. Coffey (1969)
Year of Election or Appointment: 2009
Assistant Secretary
Mr. Coffey also serves as Assistant Secretary of other funds. He is Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2010-present), and is an employee of Fidelity Investments. Previously, Mr. Coffey served as Vice President and Associate General Counsel of FMR LLC (2005-2009).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as Assistant Treasurer of other funds, and is an employee of Fidelity Investments. Previously, Mr. Davis served as Vice President and Associate General Counsel of FMR LLC (diversified financial services company, 2003-2010).
Adrien E. Deberghes (1967)
Year of Election or Appointment: 2013
President and Treasurer
Mr. Deberghes also serves as an officer of other funds. He serves as Executive Vice President of Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2016-present) and is an employee of Fidelity Investments (2008-present). Prior to joining Fidelity Investments, Mr. Deberghes was Senior Vice President of Mutual Fund Administration at State Street Corporation (2007-2008), Senior Director of Mutual Fund Administration at Investors Bank & Trust (2005-2007), and Director of Finance for Dunkin' Brands (2000-2005). Previously, Mr. Deberghes served in other fund officer roles.
Joseph DeSantis (1959)
Year of Election or Appointment: 2015
Vice President
Mr. DeSantis also serves as Vice President of other funds. Mr. DeSantis serves as a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), Chief Investment Officer, Equities (2010-present) and is an employee of Fidelity Investments.
Stephanie J. Dorsey (1969)
Year of Election or Appointment: 2010
Assistant Treasurer
Ms. Dorsey also serves as an officer of other funds. She is an employee of Fidelity Investments (2008-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Dorsey served as Treasurer (2004-2008) of the JPMorgan Mutual Funds and Vice President (2004-2008) of JPMorgan Chase Bank.
Howard J. Galligan III (1966)
Year of Election or Appointment: 2014
Chief Financial Officer
Mr. Galligan also serves as Chief Financial Officer of other funds. Mr. Galligan serves as President of Fidelity Pricing and Cash Management Services (FPCMS) (2014-present) and as a Director of Strategic Advisers, Inc. (investment adviser firm, 2008-present). Previously, Mr. Galligan served as Chief Administrative Officer of Asset Management (2011-2014) and Chief Operating Officer and Senior Vice President of Investment Support for Strategic Advisers, Inc. (2003-2011).
Scott C. Goebel (1968)
Year of Election or Appointment: 2015
Vice President
Mr. Goebel serves as Vice President of other funds and is an employee of Fidelity Investments (2001-present). Previously, Mr. Goebel served as Senior Vice President of Fidelity Management & Research Company (FMR) (investment adviser firm, 2016), Secretary of Fidelity SelectCo, LLC (investment adviser firm, 2013-2015), Fidelity Investments Money Management, Inc. (FIMM) (investment adviser firm, 2010-2015), and Fidelity Research and Analysis Company (FRAC) (investment adviser firm, 2010-2015); General Counsel, Secretary, and Senior Vice President of FMR (investment adviser firm, 2008-2015) and FMR Co., Inc. (investment adviser firm, 2008-2015); Assistant Secretary of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2008-2015) and Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2008-2015); Chief Legal Officer (CLO) of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2008-2015); Secretary and CLO of certain Fidelity® funds (2008-2015); Assistant Secretary of FIMM (2008-2010), FRAC (2008-2010), and certain funds (2007-2008); and as Vice President and Secretary of Fidelity Distributors Corporation (FDC) (2005-2007).
James D. Gryglewicz (1972)
Year of Election or Appointment: 2014
Chief Compliance Officer
Mr. Gryglewicz also serves as Chief Compliance Officer of other funds. Mr. Gryglewicz serves as Compliance Officer of Strategic Advisers, Inc. (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present), Senior Vice President of Asset Management Compliance (2009-present), and is an employee of Fidelity Investments (2004-present).
Brian B. Hogan (1964)
Year of Election or Appointment: 2009
Vice President
Mr. Hogan also serves as Trustee or Vice President of other funds. Mr. Hogan serves as a Director of FMR Investment Management (UK) Limited (investment adviser firm, 2015-present) and Fidelity SelectCo, LLC (investment adviser firm, 2014-present) and President of the Equity Division of FMR (investment adviser firm, 2009-present). Previously, Mr. Hogan served as Senior Vice President, Equity Research of FMR (2006-2009) and as a portfolio manager. Mr. Brian B. Hogan is not related to Mr. Colm A. Hogan.
Colm A. Hogan (1973)
Year of Election or Appointment: 2016
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan is an employee of Fidelity Investments (2005-present). Mr. Colm A. Hogan is not related to Mr. Brian B. Hogan.
Chris Maher (1972)
Year of Election or Appointment: 2013
Assistant Treasurer
Mr. Maher serves as Assistant Treasurer of other funds. Mr. Maher is Vice President of Valuation Oversight and is an employee of Fidelity Investments. Previously, Mr. Maher served as Vice President of Asset Management Compliance (2013), Vice President of the Program Management Group of FMR (investment adviser firm, 2010-2013), and Vice President of Valuation Oversight (2008-2010).
Anthony R. Rochte (1968)
Year of Election or Appointment: 2013
Vice President
Mr. Rochte also serves as Vice President of other funds. Mr. Rochte serves as President of Fidelity SelectCo, LLC (investment adviser firm, 2012-present) and is an employee of Fidelity Investments (2012-present). Prior to joining Fidelity Investments, Mr. Rochte served as Senior Managing Director and head of State Street Global Advisors' North American Intermediary Business Group (2006-2012).
Stacie M. Smith (1974)
Year of Election or Appointment: 2013
Assistant Treasurer
Ms. Smith also serves as an officer of other funds. She is an employee of Fidelity Investments (2009-present) and has served in other fund officer roles. Prior to joining Fidelity Investments, Ms. Smith served as Senior Audit Manager of Ernst & Young LLP (accounting firm, 1996-2009). Previously, Ms. Smith served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Marc L. Spector (1972)
Year of Election or Appointment: 2017
Assistant Treasurer
Mr. Spector also serves as an officer of other funds. Mr. Spector is an employee of Fidelity Investments (2016-present). Prior to joining Fidelity Investments, Mr. Spector served as Director at the Siegfried Group (accounting firm, 2013-2016), and prior to Siegfried Group as audit senior manager at Deloitte & Touche (accounting firm, 2005-2013).
Renee Stagnone (1975)
Year of Election or Appointment: 2016
Assistant Treasurer
Ms. Stagnone also serves as an officer of other funds. Ms. Stagnone is an employee of Fidelity Investments (1997-present). Previously, Ms. Stagnone served as Deputy Treasurer of certain Fidelity® funds (2013-2016).
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including redemption fees and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (September 1, 2016 to February 28, 2017).
Actual Expenses
The first line of the accompanying table for each fund provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Hypothetical Example for Comparison Purposes
The second line of the accompanying table for each fund provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A small balance maintenance fee of $12.00 that is charged once a year may apply for certain accounts with a value of less than $2,000. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount. In addition, the Fund, as a shareholder in the underlying Fidelity Central Funds, will indirectly bear its pro-rata share of the fees and expenses incurred by the underlying Fidelity Central Funds. These fees and expenses are not included in the Fund's annualized expense ratio used to calculate the expense estimate in the table below.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Annualized Expense Ratio-A | Beginning Account Value September 1, 2016 | Ending Account Value February 28, 2017 | Expenses Paid During Period-B September 1, 2016 to February 28, 2017 | |
| Energy Portfolio | .79% | |||
| Actual | $1,000.00 | $1,042.90 | $4.00 | |
| Hypothetical-C | $1,000.00 | $1,020.88 | $3.96 | |
| Energy Service Portfolio | .83% | |||
| Actual | $1,000.00 | $1,217.70 | $4.56 | |
| Hypothetical-C | $1,000.00 | $1,020.68 | $4.16 | |
| Natural Gas Portfolio | .85% | |||
| Actual | $1,000.00 | $1,091.00 | $4.41 | |
| Hypothetical-C | $1,000.00 | $1,020.58 | $4.26 | |
| Natural Resources Portfolio | .83% | |||
| Actual | $1,000.00 | $1,030.10 | $4.18 | |
| Hypothetical-C | $1,000.00 | $1,020.68 | $4.16 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to each Fund's annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of each fund voted to pay to shareholders of record at the opening of business on record date, the following distributions per share derived from capital gains realized from sales of portfolio securities:
| Pay Date | Record Date | Capital Gains | |
| Energy Portfolio | 04/10/17 | 04/07/17 | $0.101 |
| Energy Service Portfolio | 04/10/17 | 04/07/17 | $0.000 |
| Natural Gas Portfolio | 04/10/17 | 04/07/17 | $0.098 |
| Natural Resources Portfolio | 04/10/17 | 04/07/17 | $0.023 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
| April 2016 | December 2016 | |
| Energy Portfolio | 100% | 100% |
| Energy Service Portfolio | 86% | 96% |
| Natural Gas Portfolio | 47% | 100% |
| Natural Resources Portfolio | 95% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds may be taken into account as a dividend for purposes of the maximum rate under section 1(h)(11) of the Internal Revenue Code.
| April 2016 | December 2016 | |
| Energy Portfolio | 100% | 100% |
| Energy Service Portfolio | 100% | 100% |
| Natural Gas Portfolio | 100% | 100% |
| Natural Resources Portfolio | 100% | 100% |
The funds will notify shareholders in January 2018 of amounts for use in preparing 2017 income tax returns.
Board Approval of Investment Advisory Contracts and Management Fees
Energy Portfolio
Energy Service Portfolio
Natural Gas Portfolio
Natural Resources Portfolio
Each year, the Board of Trustees, including the Independent Trustees (together, the Board), votes on the renewal of the management contract with Fidelity SelectCo, LLC (SelectCo), an affiliate of Fidelity Management & Research Company (FMR), and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for each fund. SelectCo and the sub-advisers are collectively referred to herein as the Investment Advisers. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, requests and considers a broad range of information relevant to the renewal of the Advisory Contracts throughout the year.
The Board meets regularly and, at each of its meetings, covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of the renewal of each fund's Advisory Contracts, including the services and support provided to each fund and its shareholders. The Board has established four standing committees (Committees) — Operations, Audit, Fair Valuation, and Governance and Nominating — each composed of and chaired by Independent Trustees with varying backgrounds, to which the Board has assigned specific subject matter responsibilities in order to enhance effective decision-making by the Board. The Operations Committee, of which all of the Independent Trustees are members, meets regularly throughout the year and considers, among other matters, information specifically related to the annual consideration of the renewal of each fund's Advisory Contracts. The Board, acting directly and through its Committees, requests and receives information concerning the annual consideration of the renewal of each fund's Advisory Contracts. The Board also meets as needed to consider matters specifically related to the Board's annual consideration of the renewal of the Advisory Contracts. Members of the Board may also meet with trustees of other Fidelity funds through ad hoc joint committees to discuss certain matters relevant to all of the Fidelity funds.
At its January 2017 meeting, the Board unanimously determined to renew each fund's Advisory Contracts. In reaching its determination, the Board considered all factors it believed relevant, including (i) the nature, extent, and quality of the services to be provided to each fund and its shareholders (including the investment performance of each fund); (ii) the competitiveness of each fund's management fee and total expense ratio relative to peer funds; (iii) the total costs of the services to be provided by and the profits to be realized by Fidelity from its relationships with each fund; and (iv) the extent to which, if any, economies of scale exist and would be realized as each fund grows, and whether any economies of scale are appropriately shared with fund shareholders.
In considering whether to renew the Advisory Contracts for each fund, the Board reached a determination, with the assistance of fund counsel and Independent Trustees' counsel and through the exercise of its business judgment, that the renewal of the Advisory Contracts was in the best interests of each fund and its shareholders and that the compensation payable under the Advisory Contracts was fair and reasonable. The Board's decision to renew the Advisory Contracts was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. The Board, in reaching its determination to renew the Advisory Contracts, was aware that shareholders of each fund have a broad range of investment choices available to them, including a wide choice among funds offered by Fidelity's competitors, and that each fund's shareholders, who have the opportunity to review and weigh the disclosure provided by the fund in its prospectus and other public disclosures, have chosen to invest in that fund, which is part of the Fidelity family of funds.
Nature, Extent, and Quality of Services Provided. The Board considered the staffing of the Investment Advisers as it relates to the funds, including the backgrounds of investment personnel of SelectCo, and also considered the funds' investment objectives, strategies, and related investment philosophies. The Independent Trustees also had discussions with senior management of Fidelity's investment operations and investment groups. The Board considered the structure of the investment personnel compensation program and whether this structure provides appropriate incentives to act in the best interests of each fund. Additionally, the Board considered the portfolio managers' investments, if any, in the funds that they manage.Resources Dedicated to Investment Management and Support Services. The Board reviewed the general qualifications and capabilities of the Investment Advisers' investment staffs, including their size, education, experience, and resources, as well as Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board considered that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, compliance, and technology and operations capabilities and resources, which are integral parts of the investment management process.Shareholder and Administrative Services. The Board considered (i) the nature, extent, quality, and cost of advisory, administrative, and shareholder services performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering transfer agency, pricing and bookkeeping, and securities lending services for each fund; (ii) the nature and extent of the supervision of third party service providers, principally custodians, subcustodians, and pricing vendors; and (iii) the resources devoted to, and the record of compliance with, each fund's compliance policies and procedures. The Board also reviewed the allocation of fund brokerage, including allocations to brokers affiliated with the Investment Advisers, the use of brokerage commissions to pay fund expenses, and the use of "soft" commission dollars to pay for research services.The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value or convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information through telephone representatives and over the Internet, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.The Board noted that in 2014 the ad hoc Committee on Transfer Agency Fees was formed by it and the boards of certain other Fidelity funds to review the variety of transfer agency services and fee structures throughout the mutual fund industry compared to Fidelity's.Investment in a Large Fund Family. The Board considered the benefits to shareholders of investing in a Fidelity fund, including the benefits of investing in a fund that is part of a large family of funds offering a variety of investment disciplines and providing a large variety of mutual fund investor services. The Board noted that Fidelity had taken, or had made recommendations that resulted in the Fidelity funds taking, a number of actions over the previous year that benefited particular funds, including (i) continuing to dedicate additional resources to investment research and to the support of the senior management team that oversees asset management; (ii) continuing efforts to enhance Fidelity's global research capabilities; (iii) launching new funds and making other enhancements to meet client needs; (iv) broadening eligibility requirements for certain lower-priced share classes of, and streamlining the fee structure for, certain existing equity index funds; (v) lowering expense caps for certain existing funds and classes to reduce expenses paid by shareholders; (vi) continuing to launch dedicated lower cost underlying funds to meet portfolio construction needs related to expanding underlying fund options for Fidelity funds of funds, specifically for the Freedom Fund product lines; (vii) rationalizing product lines and gaining increased efficiencies through fund mergers and share class consolidations; (viii) continuing to develop, acquire and implement systems and technology to improve services to the funds and shareholders, strengthen information security, and increase efficiency; (ix) implementing investment enhancements to further strengthen Fidelity's target date product line to increase investors' probability of success in achieving their goals; and (x) accelerating the conversion of all remaining Class B shares to Class A shares, which have a lower expense structure.Investment Performance. The Board considered whether each fund has operated in accordance with its investment objective, as well as its record of compliance with its investment restrictions and its performance history.The Board took into account discussions with representatives of SelectCo about fund investment performance that occur at Board meetings throughout the year. In this regard the Board noted that as part of regularly scheduled fund reviews and other reports to the Board on fund performance, the Board considers annualized return information for each fund, for different time periods, measured against a securities market index ("benchmark index"). In its evaluation of fund investment performance at meetings throughout the year, the Board gave particular attention to information indicating underperformance of certain Fidelity funds for specific time periods and discussed with the Investment Advisers the reasons for such underperformance. Each of Energy Service Portfolio, Natural Gas Portfolio, and Natural Resources Portfolio underperformed its benchmark for the one-, three-, and five-year periods ended June 30, 2016, and as a result, the Board will continue to discuss with SelectCo the steps it is taking to address each such fund's performance.In addition to reviewing absolute and relative fund performance, the Independent Trustees periodically consider the appropriateness of fund performance metrics in evaluating the results achieved. In general, the Independent Trustees believe that fund performance should be evaluated based on net performance (after fees and expenses) of both the highest performing and lowest performing fund share classes, where applicable, compared to appropriate benchmark indices, over appropriate time periods that may include full market cycles, taking into account relevant factors, including the following: general market conditions; issuer-specific information; and fund cash flows and other factors. Depending on the circumstances, the Independent Trustees may be satisfied with a fund's performance notwithstanding that it lags its benchmark index for certain periods.The Independent Trustees recognize that shareholders evaluate performance on a net basis over their own holding periods, for which one-, three-, and five-year periods are often used as a proxy. For this reason, the performance information reviewed by the Board also included net cumulative total return information for each fund and an appropriate benchmark index for the most recent one-, three-, and five-year periods ended June 30, 2016.Based on its review, the Board concluded that the nature, extent, and quality of services provided to each fund under the Advisory Contracts should continue to benefit the shareholders of each fund.Competitiveness of Management Fee and Total Expense Ratio. The Board considered each fund's management fee and total expense ratio compared to "mapped groups" of competitive funds and classes created for the purpose of facilitating the Trustees' analysis of the competitiveness of management fees and total expenses. Fidelity creates "mapped groups" by combining similar Lipper investment objective categories that have comparable investment mandates. For this purpose, all sector focused equity funds are grouped in the same mapped group. Combining Lipper investment objective categories aids the Board's management fee and total expense ratio comparisons by broadening the competitive group used for comparison.Management Fee. The Board considered two proprietary management fee comparisons for the 12-month periods ended June 30 shown in basis points (BP) in the charts below. The group of Lipper funds used by the Board for management fee comparisons is referred to below as the "Total Mapped Group." The Total Mapped Group comparison focuses on a fund's standing in terms of gross management fees before expense reimbursements or caps relative to the total universe of funds with comparable investment mandates (i.e., sector equities), regardless of whether their management fee structures also are comparable. Funds with comparable management fee structures have similar management fee contractual arrangements (e.g., flat rate charged for advisory services, all-inclusive fee rate, etc.). "TMG %" represents the percentage of funds in the Total Mapped Group that had management fees that were lower than a fund's. For example, a hypothetical TMG % of 20% would mean that 80% of the funds in the Total Mapped Group had higher, and 20% had lower, management fees than a fund. The funds' actual TMG %s and the number of funds in the Total Mapped Group are in the charts below. The "Asset-Size Peer Group" (ASPG) comparison focuses on a fund's standing relative to a subset of non-Fidelity funds within the Total Mapped Group that are similar in size and management fee structure. For example, if a fund is in the first quartile of the ASPG, the fund's management fee ranks in the least expensive or lowest 25% of funds in the ASPG. The ASPG represents at least 15% of the funds in the Total Mapped Group with comparable asset size and management fee structures, subject to a minimum of 50 funds (or all funds in the Total Mapped Group if fewer than 50). Additional information, such as the ASPG quartile in which a fund's management fee rate ranked, is also included in the charts and considered by the Board.Energy Portfolio
Energy Service Portfolio
Natural Gas Portfolio
Natural Resources Portfolio
SELNR-ANN-0417
1.813649.112
Item 2.
Code of Ethics
As of the end of the period, February 28, 2017, Fidelity Select Portfolios (the trust) has adopted a code of ethics, as defined in Item 2 of Form N-CSR, that applies to its President and Treasurer and its Chief Financial Officer. A copy of the code of ethics is filed as an exhibit to this Form N-CSR.
Item 3.
Audit Committee Financial Expert
The Board of Trustees of the trust has determined that David A. Rosow is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Rosow is independent for purposes of Item 3 of Form N-CSR.
Item 4.
Principal Accountant Fees and Services
Fees and Services
The following table presents fees billed by PricewaterhouseCoopers LLP (“PwC”) in each of the last two fiscal years for services rendered to Air Transportation Portfolio, Automotive Portfolio, Banking Portfolio, Biotechnology Portfolio, Brokerage and Investment Management Portfolio, Chemicals Portfolio, Communications Equipment Portfolio, Computers Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Consumer Finance Portfolio, Consumer Staples Portfolio, Defense and Aerospace Portfolio, Energy Portfolio, Energy Service Portfolio, Environment and Alternative Energy Portfolio, Financial Services Portfolio, Gold Portfolio, Health Care Portfolio, Health Care Services Portfolio, Industrial Equipment Portfolio, Industrials Portfolio, Insurance Portfolio, IT Services Portfolio, Leisure Portfolio, Materials Portfolio, Medical Equipment and Systems Portfolio, Multimedia Portfolio, Natural Gas Portfolio, Natural Resources Portfolio, Pharmaceuticals Portfolio, Retailing Portfolio, Semiconductors Portfolio, Software and IT Services Portfolio, Technology Portfolio, Telecommunications Portfolio, Transportation Portfolio, Utilities Portfolio and Wireless Portfolio (the “Funds”):
Services Billed by PwC
February 28, 2017 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Air Transportation Portfolio | $36,000 | $- | $2,800 | $1,300 |
Automotive Portfolio | $36,000 | $- | $2,800 | $1,300 |
Banking Portfolio | $36,000 | $- | $3,000 | $1,300 |
Biotechnology Portfolio | $51,000 | $- | $33,300 | $1,800 |
Brokerage and Investment Management Portfolio | $36,000 | $- | $5,000 | $1,300 |
Chemicals Portfolio | $36,000 | $- | $3,800 | $1,200 |
Communications Equipment Portfolio | $36,000 | $- | $2,800 | $1,300 |
Computers Portfolio | $37,000 | $- | $2,800 | $1,300 |
Construction and Housing Portfolio | $36,000 | $- | $2,800 | $1,200 |
Consumer Discretionary Portfolio | $36,000 | $- | $2,800 | $1,200 |
Consumer Finance Portfolio | $38,000 | $- | $3,900 | $1,300 |
Consumer Staples Portfolio | $41,000 | $- | $2,800 | $1,400 |
Defense and Aerospace Portfolio | $36,000 | $- | $2,800 | $1,300 |
Energy Portfolio | $37,000 | $- | $5,800 | $1,300 |
Energy Service Portfolio | $37,000 | $- | $9,700 | $1,300 |
Environment and Alternative Energy Portfolio | $36,000 | $- | $2,800 | $1,200 |
Financial Services Portfolio | $37,000 | $- | $3,200 | $1,300 |
Gold Portfolio | $60,000 | $- | $7,600 | $2,200 |
Health Care Portfolio | $40,000 | $- | $3,000 | $1,400 |
Health Care Services Portfolio | $36,000 | $- | $2,800 | $1,300 |
Industrial Equipment Portfolio | $49,000 | $- | $5,300 | $1,400 |
Industrials Portfolio | $47,000 | $- | $2,800 | $1,200 |
Insurance Portfolio | $36,000 | $- | $3,200 | $1,300 |
IT Services Portfolio | $37,000 | $- | $2,800 | $1,300 |
Leisure Portfolio | $36,000 | $- | $3,200 | $1,300 |
Materials Portfolio | $42,000 | $- | $3,500 | $1,400 |
Medical Equipment and Systems Portfolio | $36,000 | $- | $2,800 | $1,300 |
Multimedia Portfolio | $36,000 | $- | $3,500 | $1,300 |
Natural Gas Portfolio | $36,000 | $- | $3,200 | $1,200 |
Natural Resources Portfolio | $35,000 | $- | $6,800 | $1,200 |
Pharmaceuticals Portfolio | $36,000 | $- | $2,800 | $1,200 |
Retailing Portfolio | $36,000 | $- | $2,800 | $1,300 |
Semiconductors Portfolio | $37,000 | $- | $2,800 | $1,300 |
Software and IT Services Portfolio | $36,000 | $- | $2,800 | $1,200 |
Technology Portfolio | $41,000 | $- | $2,800 | $1,400 |
Telecommunications Portfolio | $41,000 | $- | $2,800 | $1,400 |
Transportation Portfolio | $36,000 | $- | $2,800 | $1,300 |
Utilities Portfolio | $36,000 | $- | $5,000 | $1,300 |
Wireless Portfolio | $35,000 | $- | $2,800 | $1,200 |
February 29, 2016 FeesA
| Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees |
Air Transportation Portfolio | $40,000 | $- | $3,500 | $1,900 |
Automotive Portfolio | $36,000 | $- | $2,800 | $1,800 |
Banking Portfolio | $37,000 | $- | $2,800 | $1,900 |
Biotechnology Portfolio | $60,000 | $- | $14,500 | $6,200 |
Brokerage and Investment Management Portfolio | $37,000 | $- | $3,500 | $1,900 |
Chemicals Portfolio | $39,000 | $- | $2,800 | $2,100 |
Communications Equipment Portfolio | $39,000 | $- | $4,600 | $1,800 |
Computers Portfolio | $38,000 | $- | $3,500 | $1,900 |
Construction and Housing Portfolio | $36,000 | $- | $2,800 | $1,900 |
Consumer Discretionary Portfolio | $42,000 | $- | $2,800 | $2,100 |
Consumer Finance Portfolio | $37,000 | $- | $3,900 | $1,800 |
Consumer Staples Portfolio | $45,000 | $- | $2,800 | $2,600 |
Defense and Aerospace Portfolio | $37,000 | $- | $3,500 | $2,000 |
Energy Portfolio | $41,000 | $- | $3,100 | $2,400 |
Energy Service Portfolio | $38,000 | $- | $2,800 | $1,900 |
Environment and Alternative Energy Portfolio | $36,000 | $- | $2,800 | $1,800 |
Financial Services Portfolio | $41,000 | $- | $5,900 | $2,100 |
Gold Portfolio | $59,000 | $- | $6,800 | $2,300 |
Health Care Portfolio | $47,000 | $- | $2,800 | $4,700 |
Health Care Services Portfolio | $37,000 | $- | $2,800 | $2,000 |
Industrial Equipment Portfolio | $41,000 | $- | $2,800 | $1,800 |
Industrials Portfolio | $42,000 | $- | $2,800 | $2,100 |
Insurance Portfolio | $37,000 | $- | $2,800 | $1,900 |
IT Services Portfolio | $38,000 | $- | $2,800 | $2,100 |
Leisure Portfolio | $39,000 | $- | $2,800 | $1,900 |
Materials Portfolio | $45,000 | $- | $5,600 | $2,300 |
Medical Equipment and Systems Portfolio | $38,000 | $- | $2,800 | $2,300 |
Multimedia Portfolio | $37,000 | $- | $4,200 | $2,000 |
Natural Gas Portfolio | $39,000 | $- | $3,500 | $1,900 |
Natural Resources Portfolio | $36,000 | $- | $2,800 | $1,900 |
Pharmaceuticals Portfolio | $40,000 | $- | $2,800 | $2,400 |
Retailing Portfolio | $37,000 | $- | $2,800 | $2,100 |
Semiconductors Portfolio | $40,000 | $- | $2,800 | $2,300 |
Software and IT Services Portfolio | $38,000 | $- | $2,800 | $2,600 |
Technology Portfolio | $42,000 | $- | $2,800 | $2,600 |
Telecommunications Portfolio | $43,000 | $- | $2,800 | $1,900 |
Transportation Portfolio | $39,000 | $- | $2,800 | $2,000 |
Utilities Portfolio | $40,000 | $- | $2,800 | $2,000 |
Wireless Portfolio | $36,000 | $- | $2,800 | $1,800 |
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A Amounts may reflect rounding.
The following table presents fees billed by PwC that were required to be approved by the Audit Committee for services that relate directly to the operations and financial reporting of the Funds and that are rendered on behalf of Fidelity SelectCo, LLC (“SelectCo”) and entities controlling, controlled by, or under common control with SelectCo (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Funds (“Fund Service Providers”):
Services Billed by PwC
| February 28, 2017A | February 29, 2016A,B |
Audit-Related Fees | $5,985,000 | $5,470,000 |
Tax Fees | $105,000 | $- |
All Other Fees | $- | $- |
A Amounts may reflect rounding.
B Reflects current period presentation.
“Audit-Related Fees” represent fees billed for assurance and related services that are reasonably related to the performance of the fund audit or the review of the fund's financial statements and that are not reported under Audit Fees.
“Tax Fees” represent fees billed for tax compliance, tax advice or tax planning that relate directly to the operations and financial reporting of the fund.
“All Other Fees” represent fees billed for services provided to the fund or Fund Service Provider, a significant portion of which are assurance related, that relate directly to the operations and financial reporting of the fund, excluding those services that are reported under Audit Fees, Audit-Related Fees or Tax Fees.
Assurance services must be performed by an independent public accountant.
* * *
The aggregate non-audit fees billed by PwC for services rendered to the Funds, SelectCo (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any Fund Service Provider for each of the last two fiscal years of the Funds are as follows:
Billed By | February 28, 2017 A | February 29, 2016 A,B |
PwC | $8,195,000 | $6,320,000 |
A Amounts may reflect rounding.
B Reflects current period presentation.
The trust's Audit Committee has considered non-audit services that were not pre-approved that were provided by PwC to Fund Service Providers to be compatible with maintaining the independence of PwC in its audit of the Funds, taking into account representations from PwC, in accordance with Public Company Accounting Oversight Board rules, regarding its independence from the Funds and their related entities and SelectCo’s review of the appropriateness and permissibility under applicable law of such non-audit services prior to their provision to the Fund Service Providers.
Audit Committee Pre-Approval Policies and Procedures
The trust’s Audit Committee must pre-approve all audit and non-audit services provided by a fund’s independent registered public accounting firm relating to the operations or financial reporting of the fund. Prior to the commencement of any audit or non-audit services to a fund, the Audit Committee reviews the services to determine whether they are appropriate and permissible under applicable law.
The Audit Committee has adopted policies and procedures to, among other purposes, provide a framework for the Committee’s consideration of non-audit services by the audit firms that audit the Fidelity funds. The policies and procedures require that any non-audit service provided by a fund audit firm to a Fidelity fund and any non-audit service provided by a fund auditor to a Fund Service Provider that relates directly to the operations and financial reporting of a Fidelity fund (“Covered Service”) are subject to approval by the Audit Committee before such service is provided.
All Covered Services must be approved in advance of provision of the service either: (i) by formal resolution of the Audit Committee, or (ii) by oral or written approval of the service by the Chair of the Audit Committee (or if the Chair is unavailable, such other member of the Audit Committee as may be designated by the Chair to act in the Chair’s absence). The approval contemplated by (ii) above is permitted where the Treasurer determines that action on such an engagement is necessary before the next meeting of the Audit Committee.
Non-audit services provided by a fund audit firm to a Fund Service Provider that do not relate directly to the operations and financial reporting of a Fidelity fund are reported to the Audit Committee on a periodic basis.
Non-Audit Services Approved Pursuant to Rule 2-01(c)(7)(i)(C) and (ii) of Regulation S-X (“De Minimis Exception”)
There were no non-audit services approved or required to be approved by the Audit Committee pursuant to the De Minimis Exception during the Funds’ last two fiscal years relating to services provided to (i) the Funds or (ii) any Fund Service Provider that relate directly to the operations and financial reporting of the Funds.
Item 5.
Audit Committee of Listed Registrants
Not applicable.
Item 6.
Investments
(a)
Not applicable.
(b)
Not applicable
Item 7.
Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8.
Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9.
Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10.
Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the trust’s Board of Trustees.
Item 11.
Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the trust’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in the trust’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the trust’s internal control over financial reporting.
Item 12.
Exhibits
(a) | (1) | Code of Ethics pursuant to Item 2 of Form N-CSR is filed and attached hereto as EX-99.CODE ETH. |
(a) | (2) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
(a) | (3) | Not applicable. |
(b) |
| Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Fidelity Select Portfolios
By: | /s/Adrien E. Deberghes |
| Adrien E. Deberghes |
| President and Treasurer |
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Date: | April 27, 2017 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/Adrien E. Deberghes |
| Adrien E. Deberghes |
| President and Treasurer |
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Date: | April 27, 2017 |
By: | /s/Howard J. Galligan III |
| Howard J. Galligan III |
| Chief Financial Officer |
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Date: | April 27, 2017 |