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 811-03114
Fidelity Select Portfolios
(Exact name of registrant as specified in charter)
245 Summer St., Boston, Massachusetts 02210
(Address of principal executive offices) (Zip code)
Cynthia Lo Bessette, 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 |
Date of reporting period: | February 28, 2022 |
Item 1.
Reports to Stockholders
Fidelity® Select Portfolios®
Consumer Discretionary Sector
Automotive Portfolio
Communication Services Portfolio
Construction and Housing Portfolio
Consumer Discretionary Portfolio
Leisure Portfolio
Retailing Portfolio
February 28, 2022
Includes Fidelity and Fidelity Advisor share classes
![Fidelity Investments](https://capedge.com/proxy/N-CSR/0001379491-22-001658/fid_sun.jpg)
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Contents
Automotive Portfolio | |
Communication Services Portfolio | |
Construction and Housing Portfolio | |
Consumer Discretionary Portfolio | |
Leisure Portfolio | |
Retailing Portfolio | |
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 if you’re an individual investing directly with Fidelity, call 1-800-835-5092 if you’re a plan sponsor or participant with Fidelity as your recordkeeper or call 1-877-208-0098 on institutional accounts or if you’re an advisor or invest through one 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. © 2022 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-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT 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.
Note to Shareholders:
Early in 2020, the outbreak and spread of COVID-19 emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread. The pandemic prompted a number of measures to limit the spread of COVID-19, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. To help stem the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
In general, the overall impact of the pandemic lessened in 2021, amid a resilient economy and widespread distribution of three COVID-19 vaccines granted emergency use authorization from the U.S. Food and Drug Administration (FDA) early in the year. Still, the situation remains dynamic, and the extent and duration of its influence on financial markets and the economy is highly uncertain, due in part to a recent spike in cases based on highly contagious variants of the coronavirus.
Extreme events such as the COVID-19 crisis are exogenous shocks that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets. Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we continue to take extra steps to be responsive to customer needs. We encourage you to visit us online, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Automotive Portfolio | 7.20% | 18.81% | 13.86% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Automotive Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789798727_740.jpg)
Period Ending Values | ||
$36,614 | Automotive Portfolio | |
$39,037 | S&P 500® Index |
Automotive Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Co-Managers Elliot Mattingly and Hiroki Sugihara: For the fiscal year ending February 28, 2022, the fund gained 7.20%, underperforming the 8.95% advance of the FactSet Automotive Linked Index, as well as the broad-based S&P 500® index. The primary detractor from performance versus the industry index was our security selection in the automotive retail group, followed by non-index exposure to trucking stocks. An overweighting in construction machinery & heavy trucks also hindered the portfolio's relative result. The biggest individual relative detractor was an overweight position in Carvana (-47%). An out-of-index stake in Uber Technologies (-31%) weighed on the fund’s relative return as well the past 12 months. A holding in ACV Auctions, which we established this period, returned -38% and further pressured relative performance. Conversely, the largest contributor to performance versus the industry index was security selection in the construction machinery & heavy trucks group. Also bolstering the fund's relative result were stock picks and an underweighting in auto parts & equipment and motorcycle manufacturers. The biggest individual relative contributor was an underweighting in NIO (-50%), which was among the portfolio's biggest holdings the past 12 months. Also boosting value was our outsized exposure to Toyota Motor, which gained 26% and was among the fund's largest holdings on February 28. Adding additional relative value was our smaller-than-index stake in IAA (-37%), a position not held at period end. Notable changes in positioning this period include a lower allocation to the diversified support services and auto parts & equipment segments.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 February 8, 2022, Hiroki Sugihara assumed co-management responsibilities for the fund, joining Co-Manager Elliot Mattingly.Automotive Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
Tesla, Inc. | 10.8 |
Toyota Motor Corp. sponsored ADR | 10.4 |
General Motors Co. | 8.5 |
Ford Motor Co. | 6.4 |
O'Reilly Automotive, Inc. | 4.9 |
Ferrari NV | 4.1 |
AutoZone, Inc. | 4.0 |
Magna International, Inc. Class A (sub. vtg.) | 3.9 |
Aptiv PLC | 3.7 |
Rivian Automotive, Inc. | 3.5 |
60.2 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Automobiles | 58.7% | |
Specialty Retail | 17.2% | |
Auto Components | 13.6% | |
Commercial Services & Supplies | 4.0% | |
Distributors | 3.7% | |
All Others* | 2.8% |
* Includes short-term investments and net other assets (liabilities).
Automotive Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 100.2% | |||
Shares | Value | ||
Auto Components - 13.6% | |||
Auto Parts & Equipment - 13.6% | |||
Adient PLC (a) | 101,748 | $4,553,223 | |
Aptiv PLC (a) | 46,946 | 6,076,690 | |
Lear Corp. | 32,778 | 5,157,291 | |
Magna International, Inc. Class A (sub. vtg.) | 87,700 | 6,515,747 | |
Novem Group SA | 18,752 | 221,975 | |
22,524,926 | |||
Automobiles - 58.7% | |||
Automobile Manufacturers - 58.7% | |||
Ferrari NV | 31,521 | 6,786,787 | |
Ford Motor Co. | 605,931 | 10,640,148 | |
General Motors Co. (a) | 298,513 | 13,946,527 | |
Honda Motor Co. Ltd. sponsored ADR | 121,106 | 3,700,999 | |
Li Auto, Inc. ADR (a) | 102,770 | 3,129,347 | |
Lucid Group, Inc. Class A (a) | 47,100 | 1,364,958 | |
Mercedes-Benz Group AG (Germany) | 27,660 | 2,160,787 | |
NIO, Inc. sponsored ADR (a) | 196,330 | 4,484,177 | |
Rivian Automotive, Inc. (b) | 85,016 | 5,743,681 | |
Rivian Automotive, Inc. | 2,866 | 183,946 | |
Stellantis NV (b) | 239,338 | 4,375,099 | |
Tesla, Inc. (a) | 20,479 | 17,825,535 | |
Toyota Motor Corp. sponsored ADR (b) | 93,814 | 17,163,271 | |
XPeng, Inc. ADR (a) | 151,347 | 5,504,490 | |
97,009,752 | |||
Commercial Services & Supplies - 4.0% | |||
Diversified Support Services - 4.0% | |||
ACV Auctions, Inc. Class A (a)(b) | 95,405 | 1,258,392 | |
Copart, Inc. (a) | 43,740 | 5,374,771 | |
6,633,163 | |||
Distributors - 3.7% | |||
Distributors - 3.7% | |||
Genuine Parts Co. | 10,488 | 1,281,214 | |
LKQ Corp. | 100,690 | 4,727,396 | |
6,008,610 | |||
Electrical Equipment - 0.8% | |||
Electrical Components & Equipment - 0.8% | |||
Sensata Technologies, Inc. PLC (a) | 21,718 | 1,257,689 | |
Machinery - 0.6% | |||
Construction Machinery & Heavy Trucks - 0.6% | |||
Allison Transmission Holdings, Inc. | 24,568 | 981,246 | |
Professional Services - 0.0% | |||
Research & Consulting Services - 0.0% | |||
Otonomo Technologies Ltd. (a) | 5,390 | 7,762 | |
Road & Rail - 1.6% | |||
Trucking - 1.6% | |||
Lyft, Inc. (a) | 21,434 | 834,640 | |
Uber Technologies, Inc. (a) | 51,363 | 1,850,609 | |
2,685,249 | |||
Specialty Retail - 17.2% | |||
Automotive Retail - 17.2% | |||
Advance Auto Parts, Inc. | 6,820 | 1,394,554 | |
AutoZone, Inc. (a) | 3,514 | 6,547,952 | |
CarMax, Inc. (a) | 11,466 | 1,253,578 | |
Carvana Co. Class A (a) | 29,306 | 4,409,674 | |
Group 1 Automotive, Inc. | 13,248 | 2,410,209 | |
Lithia Motors, Inc. Class A (sub. vtg.) | 12,971 | 4,420,776 | |
O'Reilly Automotive, Inc. (a) | 12,363 | 8,026,554 | |
28,463,297 | |||
TOTAL COMMON STOCKS | |||
(Cost $121,253,477) | 165,571,694 | ||
Convertible Preferred Stocks - 0.1% | |||
Textiles, Apparel & Luxury Goods - 0.1% | |||
Textiles - 0.1% | |||
CelLink Corp. Series D (c)(d) | |||
(Cost $77,048) | 3,700 | 77,048 | |
Money Market Funds - 11.1% | |||
Fidelity Cash Central Fund 0.07% (e) | 252,239 | 252,289 | |
Fidelity Securities Lending Cash Central Fund 0.07% (e)(f) | 18,143,195 | 18,145,010 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $18,397,299) | 18,397,299 | ||
TOTAL INVESTMENT IN SECURITIES - 111.4% | |||
(Cost $139,727,824) | 184,046,041 | ||
NET OTHER ASSETS (LIABILITIES) - (11.4)% | (18,870,454) | ||
NET ASSETS - 100% | $165,175,587 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Restricted securities (including private placements) - 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 $77,048 or 0.0% of net assets.
(d) Level 3 security
(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 |
CelLink Corp. Series D | 1/20/22 | $77,048 |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $1,184,333 | $81,196,042 | $82,128,086 | $736 | $-- | $-- | $252,289 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 24,349,005 | 265,355,806 | 271,559,801 | 34,167 | -- | -- | 18,145,010 | 0.0% |
Total | $25,533,338 | $346,551,848 | $353,687,887 | $34,903 | $-- | $-- | $18,397,299 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $165,571,694 | $163,004,986 | $2,566,708 | $-- |
Convertible Preferred Stocks | 77,048 | -- | -- | 77,048 |
Money Market Funds | 18,397,299 | 18,397,299 | -- | -- |
Total Investments in Securities: | $184,046,041 | $181,402,285 | $2,566,708 | $77,048 |
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 | 62.0% |
Japan | 12.6% |
Netherlands | 6.8% |
Cayman Islands | 6.0% |
Canada | 3.9% |
Bailiwick of Jersey | 3.7% |
Ireland | 2.8% |
Germany | 1.4% |
Others (Individually Less Than 1%) | 0.8% |
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, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $17,409,608) — See accompanying schedule: Unaffiliated issuers (cost $121,330,525) | $165,648,742 | |
Fidelity Central Funds (cost $18,397,299) | 18,397,299 | |
Total Investment in Securities (cost $139,727,824) | $184,046,041 | |
Receivable for investments sold | 7,191,282 | |
Receivable for fund shares sold | 152,712 | |
Dividends receivable | 115,534 | |
Distributions receivable from Fidelity Central Funds | 5,315 | |
Prepaid expenses | 337 | |
Other receivables | 3,745 | |
Total assets | 191,514,966 | |
Liabilities | ||
Payable for investments purchased | $7,308,815 | |
Payable for fund shares redeemed | 734,756 | |
Accrued management fee | 77,171 | |
Other affiliated payables | 40,356 | |
Other payables and accrued expenses | 33,681 | |
Collateral on securities loaned | 18,144,600 | |
Total liabilities | 26,339,379 | |
Net Assets | $165,175,587 | |
Net Assets consist of: | ||
Paid in capital | $119,125,812 | |
Total accumulated earnings (loss) | 46,049,775 | |
Net Assets | $165,175,587 | |
Net Asset Value, offering price and redemption price per share ($165,175,587 ÷ 2,920,239 shares) | $56.56 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $1,459,288 | |
Non-Cash dividends | 542,033 | |
Special dividends | 341,997 | |
Income from Fidelity Central Funds (including $34,167 from security lending) | 34,903 | |
Total income | 2,378,221 | |
Expenses | ||
Management fee | $1,061,842 | |
Transfer agent fees | 382,872 | |
Accounting fees | 78,731 | |
Custodian fees and expenses | 19,634 | |
Independent trustees' fees and expenses | 723 | |
Registration fees | 45,892 | |
Audit | 38,401 | |
Legal | 130 | |
Interest | 422 | |
Miscellaneous | 781 | |
Total expenses before reductions | 1,629,428 | |
Expense reductions | (4,637) | |
Total expenses after reductions | 1,624,791 | |
Net investment income (loss) | 753,430 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 10,795,396 | |
Foreign currency transactions | (1,641) | |
Total net realized gain (loss) | 10,793,755 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | 969,110 | |
Unfunded commitments | (360,479) | |
Assets and liabilities in foreign currencies | (1,509) | |
Total change in net unrealized appreciation (depreciation) | 607,122 | |
Net gain (loss) | 11,400,877 | |
Net increase (decrease) in net assets resulting from operations | $12,154,307 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $753,430 | $81,335 |
Net realized gain (loss) | 10,793,755 | 4,642,110 |
Change in net unrealized appreciation (depreciation) | 607,122 | 34,682,030 |
Net increase (decrease) in net assets resulting from operations | 12,154,307 | 39,405,475 |
Distributions to shareholders | (6,137,128) | (6,816,480) |
Share transactions | ||
Proceeds from sales of shares | 189,559,902 | 177,484,001 |
Reinvestment of distributions | 5,872,623 | 6,545,736 |
Cost of shares redeemed | (234,498,841) | (54,873,788) |
Net increase (decrease) in net assets resulting from share transactions | (39,066,316) | 129,155,949 |
Total increase (decrease) in net assets | (33,049,137) | 161,744,944 |
Net Assets | ||
Beginning of period | 198,224,724 | 36,479,780 |
End of period | $165,175,587 | $198,224,724 |
Other Information | ||
Shares | ||
Sold | 3,055,146 | 3,627,198 |
Issued in reinvestment of distributions | 95,061 | 178,794 |
Redeemed | (3,886,592) | (1,194,382) |
Net increase (decrease) | (736,385) | 2,611,610 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Automotive Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $54.21 | $34.91 | $33.29 | $37.52 | $36.78 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .23D | .05E | .46F | .36 | .39G |
Net realized and unrealized gain (loss) | 3.82 | 23.73 | 2.67H | (2.15) | 6.11 |
Total from investment operations | 4.05 | 23.78 | 3.13 | (1.79) | 6.50 |
Distributions from net investment income | (.29) | (.01) | (.49)I | (.38) | (.20) |
Distributions from net realized gain | (1.40) | (4.47) | (1.02)I | (2.06) | (5.56) |
Total distributions | (1.70)J | (4.48) | (1.51) | (2.44) | (5.76) |
Redemption fees added to paid in capitalB | – | – | – | – | –K |
Net asset value, end of period | $56.56 | $54.21 | $34.91 | $33.29 | $37.52 |
Total ReturnL | 7.20% | 78.19% | 9.14%H | (4.66)% | 19.08% |
Ratios to Average Net AssetsC,M,N | |||||
Expenses before reductions | .80% | .88% | 1.00% | .97% | .97% |
Expenses net of fee waivers, if any | .80% | .88% | 1.00% | .97% | .96% |
Expenses net of all reductions | .80% | .87% | .99% | .97% | .96% |
Net investment income (loss) | .37%D | .10%E | 1.33%F | 1.04% | 1.04%G |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $165,176 | $198,225 | $36,480 | $40,781 | $56,139 |
Portfolio turnover rateO | 69% | 56% | 45% | 31% | 117% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.10 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .20%.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.14 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been (.21) %.
F Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.09 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.07%.
G Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.08 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .83%.
H Net realized and unrealized gain (loss) per share reflects proceeds received from litigation which amounted to $.19 per share. Excluding these litigation proceeds, the total return would have been 8.58%.
I The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
J Total distributions per share do not sum due to rounding.
K Amount represents less than $.005 per share.
L Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
M Fees and expenses of any underlying mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
N Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
O Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the financial statements.
Communication 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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Class A (incl. 5.75% sales charge) | (10.51)% | 11.19% | 14.01% |
Class M (incl. 3.50% sales charge) | (8.60)% | 11.53% | 14.18% |
Class C (incl. contingent deferred sales charge) | (6.66)% | 11.97% | 14.40% |
Communication Services Portfolio | (4.79)% | 12.73% | 14.79% |
Class I | (4.79)% | 12.73% | 14.79% |
Class Z | (4.65)% | 12.83% | 14.84% |
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.
The initial offering of Class Z shares took place on August 13, 2013. Returns prior to August 13, 2013, are those of Class I.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Communication Services Portfolio, a class of the fund, on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789798814_740.jpg)
Period Ending Values | ||
$39,731 | Communication Services Portfolio | |
$39,037 | S&P 500® Index |
Communication Services Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Matthew Drukker: For the fiscal year ending February 28, 2022, the fund's share classes (excluding sales charges, if applicable) returned roughly -6% to -5%, roughly in line with the -5.74% return of the MSCI US IMI Communication Services 25/50 (Media Linked) Index, but underperforming the benchmark, the broad-based S&P 500® index. Versus the sector index, security selection added notable value. Stock picks and an underweighting in movies & entertainment contributed to the fund’s relative result, as did choices in the interactive media & services segment. Not owning Roku and Pinterest, index components that returned roughly -65% and -67%, respectively, contributed on a relative basis. Owning an outsized stake in broadcaster Liberty Media (+27%) helped as well. In contrast, stock selection in interactive home entertainment and positioning in cable & satellite and integrated telecommunication services detracted from the fund's relative return. It particularly hurt to own a non-index stake in interactive home entertainment company Sea (-58%), a position we established the past year. Overweighting cable & satellite company Altice (-66%) weighted on the fund’s return versus the sector index as well. Notable changes in fund positioning the past 12 months included increased exposure to the wireless telecommunication services subindustry and a lower allocation to interactive home entertainment.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.
Communication Services Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
Alphabet, Inc. Class A | 25.0 |
Meta Platforms, Inc. Class A | 15.8 |
T-Mobile U.S., Inc. | 6.1 |
The Walt Disney Co. | 4.3 |
Activision Blizzard, Inc. | 4.2 |
Liberty Global PLC Class C | 3.4 |
AT&T, Inc. | 3.1 |
Uber Technologies, Inc. | 3.0 |
Snap, Inc. Class A | 2.9 |
Liberty Broadband Corp. Class A | 2.9 |
70.7 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Interactive Media & Services | 47.2% | |
Entertainment | 19.1% | |
Media | 12.6% | |
Diversified Telecommunication Services | 8.0% | |
Wireless Telecommunication Services | 6.1% | |
All Others* | 7.0% |
* Includes short-term investments and net other assets (liabilities).
Communication Services Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 99.3% | |||
Shares | Value | ||
Diversified Telecommunication Services - 8.0% | |||
Alternative Carriers - 4.7% | |||
EchoStar Holding Corp. Class A (a)(b) | 121,900 | $2,967,046 | |
Iridium Communications, Inc. (a) | 28,600 | 1,132,274 | |
Liberty Global PLC Class C (a) | 1,369,200 | 35,421,204 | |
Liberty Latin America Ltd. Class C (a) | 1,002,286 | 10,113,066 | |
49,633,590 | |||
Integrated Telecommunication Services - 3.3% | |||
AT&T, Inc. | 1,352,800 | 32,047,832 | |
Deutsche Telekom AG | 124,448 | 2,230,691 | |
34,278,523 | |||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 83,912,113 | ||
Entertainment - 19.1% | |||
Interactive Home Entertainment - 7.0% | |||
Activision Blizzard, Inc. | 545,800 | 44,482,700 | |
Electronic Arts, Inc. | 79,200 | 10,303,128 | |
Motorsport Games, Inc. Class A (a)(b) | 4,300 | 14,663 | |
Sea Ltd. ADR (a) | 40,700 | 5,925,920 | |
Skillz, Inc. (a) | 26,600 | 82,726 | |
Take-Two Interactive Software, Inc. (a) | 16,700 | 2,705,400 | |
Zynga, Inc. (a) | 1,134,700 | 10,303,076 | |
73,817,613 | |||
Movies & Entertainment - 12.1% | |||
Cinemark Holdings, Inc. (a)(b) | 437,600 | 7,675,504 | |
Endeavor Group Holdings, Inc. (a) | 8,400 | 253,092 | |
Lions Gate Entertainment Corp.: | |||
Class A (a)(b) | 34,500 | 529,920 | |
Class B (a)(b) | 486,834 | 6,937,385 | |
Marcus Corp. (a)(b) | 256,300 | 4,659,534 | |
Netflix, Inc. (a) | 74,800 | 29,510,096 | |
The Walt Disney Co. (a) | 302,471 | 44,904,845 | |
Warner Music Group Corp. Class A | 459,700 | 16,650,334 | |
World Wrestling Entertainment, Inc. Class A (b) | 253,100 | 14,998,706 | |
126,119,416 | |||
TOTAL ENTERTAINMENT | 199,937,029 | ||
Equity Real Estate Investment Trusts (REITs) - 0.6% | |||
Specialized REITs - 0.6% | |||
Lamar Advertising Co. Class A | 61,100 | 6,663,566 | |
Hotels, Restaurants & Leisure - 1.2% | |||
Casinos & Gaming - 1.2% | |||
Flutter Entertainment PLC (a) | 86,400 | 12,439,091 | |
Interactive Media & Services - 46.8% | |||
Interactive Media & Services - 46.8% | |||
Alphabet, Inc. Class A (a) | 96,700 | 261,200,238 | |
Angi, Inc. (a)(b) | 864,600 | 5,957,094 | |
Match Group, Inc. (a) | 48,170 | 5,370,473 | |
Meta Platforms, Inc. Class A (a) | 781,100 | 164,835,533 | |
Snap, Inc. Class A (a) | 753,400 | 30,090,796 | |
Twitter, Inc. (a) | 290,300 | 10,320,165 | |
Vimeo, Inc. (a) | 51,464 | 668,517 | |
Zoominfo Technologies, Inc. (a) | 190,800 | 10,434,852 | |
488,877,668 | |||
Internet & Direct Marketing Retail - 1.2% | |||
Internet & Direct Marketing Retail - 1.2% | |||
Amazon.com, Inc. (a) | 4,100 | 12,592,166 | |
Media - 12.6% | |||
Advertising - 0.4% | |||
S4 Capital PLC (a) | 427,000 | 2,664,544 | |
TechTarget, Inc. (a) | 12,100 | 948,398 | |
3,612,942 | |||
Broadcasting - 4.4% | |||
Fox Corp. Class A | 54,400 | 2,275,552 | |
Liberty Media Corp.: | |||
Liberty Media Class A (a) | 384,562 | 21,597,002 | |
Liberty SiriusXM Series A | 418,200 | 21,060,552 | |
Liberty SiriusXM Series C (a) | 24,070 | 1,211,202 | |
46,144,308 | |||
Cable & Satellite - 7.2% | |||
Altice U.S.A., Inc. Class A (a) | 709,900 | 8,206,444 | |
Comcast Corp. Class A | 408,000 | 19,078,080 | |
DISH Network Corp. Class A (a) | 44,539 | 1,423,466 | |
Liberty Broadband Corp.: | |||
Class A (a) | 206,623 | 29,921,077 | |
Class C (a) | 113,700 | 16,679,790 | |
75,308,857 | |||
Publishing - 0.6% | |||
News Corp. Class A | 270,800 | 6,044,256 | |
TOTAL MEDIA | 131,110,363 | ||
Real Estate Management & Development - 0.7% | |||
Real Estate Services - 0.7% | |||
Zillow Group, Inc. Class A (a)(b) | 116,800 | 6,689,136 | |
Road & Rail - 3.0% | |||
Trucking - 3.0% | |||
Uber Technologies, Inc. (a) | 881,700 | 31,767,651 | |
Software - 0.0% | |||
Application Software - 0.0% | |||
Viant Technology, Inc. | 1,200 | 9,876 | |
Wireless Telecommunication Services - 6.1% | |||
Wireless Telecommunication Services - 6.1% | |||
T-Mobile U.S., Inc. (a) | 519,850 | 64,050,719 | |
TOTAL COMMON STOCKS | |||
(Cost $786,653,386) | 1,038,049,378 | ||
Convertible Preferred Stocks - 0.4% | |||
Interactive Media & Services - 0.4% | |||
Interactive Media & Services - 0.4% | |||
Reddit, Inc. Series F (c)(d) | |||
(Cost $3,584,075) | 58,000 | 3,584,075 | |
Money Market Funds - 2.9% | |||
Fidelity Cash Central Fund 0.07% (e) | 605 | 605 | |
Fidelity Securities Lending Cash Central Fund 0.07% (e)(f) | 30,564,163 | 30,567,219 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $30,567,824) | 30,567,824 | ||
TOTAL INVESTMENT IN SECURITIES - 102.6% | |||
(Cost $820,805,285) | 1,072,201,277 | ||
NET OTHER ASSETS (LIABILITIES) - (2.6)% | (26,898,466) | ||
NET ASSETS - 100% | $1,045,302,811 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Level 3 security
(d) Restricted securities (including private placements) - 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 $3,584,075 or 0.3% 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 |
Reddit, Inc. Series F | 8/11/21 | $3,584,075 |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $12,091,854 | $584,764,094 | $596,855,343 | $9,704 | $-- | $-- | $605 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 10,915,194 | 312,684,455 | 293,032,430 | 41,206 | -- | -- | 30,567,219 | 0.1% |
Total | $23,007,048 | $897,448,549 | $889,887,773 | $50,910 | $-- | $-- | $30,567,824 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $1,038,049,378 | $1,020,715,052 | $17,334,326 | $-- |
Convertible Preferred Stocks | 3,584,075 | -- | -- | 3,584,075 |
Money Market Funds | 30,567,824 | 30,567,824 | -- | -- |
Total Investments in Securities: | $1,072,201,277 | $1,051,282,876 | $17,334,326 | $3,584,075 |
See accompanying notes which are an integral part of the financial statements.
Communication Services Portfolio
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $29,629,124) — See accompanying schedule: Unaffiliated issuers (cost $790,237,461) | $1,041,633,453 | |
Fidelity Central Funds (cost $30,567,824) | 30,567,824 | |
Total Investment in Securities (cost $820,805,285) | $1,072,201,277 | |
Cash | 218 | |
Receivable for investments sold | 6,469,674 | |
Receivable for fund shares sold | 531,160 | |
Dividends receivable | 69,810 | |
Distributions receivable from Fidelity Central Funds | 1,997 | |
Prepaid expenses | 2,713 | |
Other receivables | 21,926 | |
Total assets | 1,079,298,775 | |
Liabilities | ||
Payable for fund shares redeemed | $1,525,106 | |
Accrued management fee | 472,588 | |
Distribution and service plan fees payable | 17,681 | |
Notes payable to affiliates | 1,166,000 | |
Other affiliated payables | 205,150 | |
Other payables and accrued expenses | 43,114 | |
Collateral on securities loaned | 30,566,325 | |
Total liabilities | 33,995,964 | |
Net Assets | $1,045,302,811 | |
Net Assets consist of: | ||
Paid in capital | $811,255,175 | |
Total accumulated earnings (loss) | 234,047,636 | |
Net Assets | $1,045,302,811 | |
Net Asset Value and Maximum Offering Price | ||
Class A: | ||
Net Asset Value and redemption price per share ($33,678,712 ÷ 429,730 shares)(a) | $78.37 | |
Maximum offering price per share (100/94.25 of $78.37) | $83.15 | |
Class M: | ||
Net Asset Value and redemption price per share ($5,816,800 ÷ 74,627 shares)(a) | $77.94 | |
Maximum offering price per share (100/96.50 of $77.94) | $80.77 | |
Class C: | ||
Net Asset Value and offering price per share ($8,937,832 ÷ 116,359 shares)(a) | $76.81 | |
Communication Services: | ||
Net Asset Value, offering price and redemption price per share ($958,303,686 ÷ 12,132,852 shares) | $78.98 | |
Class I: | ||
Net Asset Value, offering price and redemption price per share ($32,089,046 ÷ 406,527 shares) | $78.93 | |
Class Z: | ||
Net Asset Value, offering price and redemption price per share ($6,476,735 ÷ 81,779 shares) | $79.20 |
(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, 2022 | ||
Investment Income | ||
Dividends | $4,764,715 | |
Income from Fidelity Central Funds (including $41,206 from security lending) | 50,910 | |
Total income | 4,815,625 | |
Expenses | ||
Management fee | $6,599,222 | |
Transfer agent fees | 2,159,150 | |
Distribution and service plan fees | 224,360 | |
Accounting fees | 402,926 | |
Custodian fees and expenses | 11,087 | |
Independent trustees' fees and expenses | 4,382 | |
Registration fees | 171,904 | |
Audit | 44,599 | |
Legal | 2,294 | |
Interest | 219 | |
Miscellaneous | 5,468 | |
Total expenses before reductions | 9,625,611 | |
Expense reductions | (29,719) | |
Total expenses after reductions | 9,595,892 | |
Net investment income (loss) | (4,780,267) | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 19,895,885 | |
Foreign currency transactions | (53,165) | |
Total net realized gain (loss) | 19,842,720 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | (98,753,443) | |
Assets and liabilities in foreign currencies | (198) | |
Total change in net unrealized appreciation (depreciation) | (98,753,641) | |
Net gain (loss) | (78,910,921) | |
Net increase (decrease) in net assets resulting from operations | $(83,691,188) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(4,780,267) | $(3,703,093) |
Net realized gain (loss) | 19,842,720 | 60,404,018 |
Change in net unrealized appreciation (depreciation) | (98,753,641) | 240,367,274 |
Net increase (decrease) in net assets resulting from operations | (83,691,188) | 297,068,199 |
Distributions to shareholders | (63,905,764) | (30,372,833) |
Share transactions - net increase (decrease) | 267,487,210 | 63,041,939 |
Total increase (decrease) in net assets | 119,890,258 | 329,737,305 |
Net Assets | ||
Beginning of period | 925,412,553 | 595,675,248 |
End of period | $1,045,302,811 | $925,412,553 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Communication Services Portfolio Class A
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B |
Selected Per–Share Data | ||||
Net asset value, beginning of period | $87.31 | $60.63 | $74.85 | $78.20 |
Income from Investment Operations | ||||
Net investment income (loss)C,D | (.60) | (.59) | (.30) | (.12) |
Net realized and unrealized gain (loss) | (3.18) | 30.37 | 8.77 | 2.68 |
Total from investment operations | (3.78) | 29.78 | 8.47 | 2.56 |
Distributions from net investment income | – | – | – | (.14) |
Distributions from net realized gain | (5.16) | (3.10) | (22.69) | (5.77) |
Total distributions | (5.16) | (3.10) | (22.69) | (5.91) |
Net asset value, end of period | $78.37 | $87.31 | $60.63 | $74.85 |
Total ReturnE,F,G | (5.05)% | 50.81% | 11.90% | 3.83% |
Ratios to Average Net AssetsD,H,I | ||||
Expenses before reductions | 1.03% | 1.08% | 1.07% | 1.13%J |
Expenses net of fee waivers, if any | 1.03% | 1.08% | 1.07% | 1.12%J |
Expenses net of all reductions | 1.03% | 1.07% | 1.06% | 1.11%J |
Net investment income (loss) | (.65)% | (.81)% | (.47)% | (.68)%J |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $33,679 | $22,962 | $9,947 | $715 |
Portfolio turnover rateK | 57% | 63% | 73% | 107% |
A For the year ended February 29.
B For the period November 30, 2018 (commencement of sale of shares) through February 28, 2019.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
E Total returns for periods of less than one year are not annualized.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Annualized
K Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the financial statements.
Communication Services Portfolio Class M
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B |
Selected Per–Share Data | ||||
Net asset value, beginning of period | $86.94 | $60.52 | $74.82 | $78.20 |
Income from Investment Operations | ||||
Net investment income (loss)C,D | (.82) | (.77) | (.48) | (.16) |
Net realized and unrealized gain (loss) | (3.15) | 30.29 | 8.75 | 2.67 |
Total from investment operations | (3.97) | 29.52 | 8.27 | 2.51 |
Distributions from net investment income | – | – | – | (.12) |
Distributions from net realized gain | (5.03) | (3.10) | (22.57) | (5.77) |
Total distributions | (5.03) | (3.10) | (22.57) | (5.89) |
Net asset value, end of period | $77.94 | $86.94 | $60.52 | $74.82 |
Total ReturnE,F,G | (5.28)% | 50.47% | 11.58% | 3.76% |
Ratios to Average Net AssetsD,H,I | ||||
Expenses before reductions | 1.27% | 1.32% | 1.35% | 1.36%J |
Expenses net of fee waivers, if any | 1.27% | 1.32% | 1.35% | 1.35%J |
Expenses net of all reductions | 1.27% | 1.32% | 1.34% | 1.34%J |
Net investment income (loss) | (.88)% | (1.06)% | (.75)% | (.90)%J |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $5,817 | $5,386 | $2,264 | $485 |
Portfolio turnover rateK | 57% | 63% | 73% | 107% |
A For the year ended February 29.
B For the period November 30, 2018 (commencement of sale of shares) through February 28, 2019.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
E Total returns for periods of less than one year are not annualized.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Annualized
K Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the financial statements.
Communication Services Portfolio Class C
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B |
Selected Per–Share Data | ||||
Net asset value, beginning of period | $86.05 | $60.20 | $74.76 | $78.20 |
Income from Investment Operations | ||||
Net investment income (loss)C,D | (1.27) | (1.12) | (.81) | (.25) |
Net realized and unrealized gain (loss) | (3.07) | 30.07 | 8.74 | 2.67 |
Total from investment operations | (4.34) | 28.95 | 7.93 | 2.42 |
Distributions from net investment income | – | – | – | (.09) |
Distributions from net realized gain | (4.90) | (3.10) | (22.49) | (5.77) |
Total distributions | (4.90) | (3.10) | (22.49) | (5.86) |
Net asset value, end of period | $76.81 | $86.05 | $60.20 | $74.76 |
Total ReturnE,F,G | (5.76)% | 49.77% | 11.01% | 3.63% |
Ratios to Average Net AssetsD,H,I | ||||
Expenses before reductions | 1.78% | 1.80% | 1.86% | 1.87%J |
Expenses net of fee waivers, if any | 1.78% | 1.80% | 1.86% | 1.85%J |
Expenses net of all reductions | 1.78% | 1.79% | 1.85% | 1.84%J |
Net investment income (loss) | (1.39)% | (1.53)% | (1.26)% | (1.37)%J |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $8,938 | $6,856 | $1,982 | $377 |
Portfolio turnover rateK | 57% | 63% | 73% | 107% |
A For the year ended February 29.
B For the period November 30, 2018 (commencement of sale of shares) through February 28, 2019.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
E Total returns for periods of less than one year are not annualized.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Annualized
K Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the financial statements.
Communication Services Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $87.88 | $60.82 | $74.88 | $79.70 | $80.75 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | (.34) | (.36) | (.12) | .13 | .21 |
Net realized and unrealized gain (loss) | (3.22) | 30.52 | 8.79 | 5.31 | 3.14 |
Total from investment operations | (3.56) | 30.16 | 8.67 | 5.44 | 3.35 |
Distributions from net investment income | – | – | – | (.20) | (.16) |
Distributions from net realized gain | (5.34) | (3.10) | (22.73) | (10.06) | (4.23) |
Total distributions | (5.34) | (3.10) | (22.73) | (10.26) | (4.40)D |
Redemption fees added to paid in capitalB | – | – | – | – | –E |
Net asset value, end of period | $78.98 | $87.88 | $60.82 | $74.88 | $79.70 |
Total ReturnF | (4.79)% | 51.29% | 12.22% | 8.12% | 4.16% |
Ratios to Average Net AssetsC,G,H | |||||
Expenses before reductions | .75% | .77% | .78% | .82% | .80% |
Expenses net of fee waivers, if any | .74% | .77% | .78% | .81% | .80% |
Expenses net of all reductions | .74% | .76% | .77% | .80% | .79% |
Net investment income (loss) | (.36)% | (.51)% | (.18)% | .17% | .26% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $958,304 | $859,871 | $577,157 | $562,422 | $509,375 |
Portfolio turnover rateI | 57% | 63% | 73% | 107% | 22% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the financial statements.
Communication Services Portfolio Class I
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B |
Selected Per–Share Data | ||||
Net asset value, beginning of period | $87.86 | $60.80 | $74.89 | $78.20 |
Income from Investment Operations | ||||
Net investment income (loss)C,D | (.34) | (.39) | (.11) | (.06) |
Net realized and unrealized gain (loss) | (3.22) | 30.55 | 8.78 | 2.67 |
Total from investment operations | (3.56) | 30.16 | 8.67 | 2.61 |
Distributions from net investment income | – | – | – | (.15) |
Distributions from net realized gain | (5.37) | (3.10) | (22.76) | (5.77) |
Total distributions | (5.37) | (3.10) | (22.76) | (5.92) |
Net asset value, end of period | $78.93 | $87.86 | $60.80 | $74.89 |
Total ReturnE,F | (4.79)% | 51.31% | 12.22% | 3.91% |
Ratios to Average Net AssetsD,G,H | ||||
Expenses before reductions | .75% | .78% | .77% | .70%I |
Expenses net of fee waivers, if any | .75% | .77% | .77% | .69%I |
Expenses net of all reductions | .75% | .77% | .76% | .68%I |
Net investment income (loss) | (.37)% | (.51)% | (.17)% | (.30)%I |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $32,089 | $26,521 | $2,493 | $452 |
Portfolio turnover rateJ | 57% | 63% | 73% | 107% |
A For the year ended February 29.
B For the period November 30, 2018 (commencement of sale of shares) through February 28, 2019.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
E Total returns for periods of less than one year are not annualized.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Annualized
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the financial statements.
Communication Services Portfolio Class Z
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B |
Selected Per–Share Data | ||||
Net asset value, beginning of period | $88.04 | $60.85 | $74.89 | $78.20 |
Income from Investment Operations | ||||
Net investment income (loss)C,D | (.22) | (.28) | (.03) | (.03) |
Net realized and unrealized gain (loss) | (3.23) | 30.57 | 8.80 | 2.65 |
Total from investment operations | (3.45) | 30.29 | 8.77 | 2.62 |
Distributions from net investment income | – | – | – | (.16) |
Distributions from net realized gain | (5.39) | (3.10) | (22.81) | (5.77) |
Total distributions | (5.39) | (3.10) | (22.81) | (5.93) |
Net asset value, end of period | $79.20 | $88.04 | $60.85 | $74.89 |
Total ReturnE,F | (4.65)% | 51.48% | 12.38% | 3.92% |
Ratios to Average Net AssetsD,G,H | ||||
Expenses before reductions | .62% | .64% | .65% | .64%I |
Expenses net of fee waivers, if any | .61% | .64% | .65% | .62%I |
Expenses net of all reductions | .61% | .63% | .64% | .61%I |
Net investment income (loss) | (.23)% | (.38)% | (.05)% | (.16)%I |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $6,477 | $3,817 | $1,833 | $529 |
Portfolio turnover rateJ | 57% | 63% | 73% | 107% |
A For the year ended February 29.
B For the period November 30, 2018 (commencement of sale of shares) through February 28, 2019.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
E Total returns for periods of less than one year are not annualized.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Annualized
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Construction and Housing Portfolio | 22.95% | 18.71% | 17.01% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Construction and Housing Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789799162_740.jpg)
Period Ending Values | ||
$48,123 | Construction and Housing Portfolio | |
$39,037 | S&P 500® Index |
Construction and Housing Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Jordan Michaels: For the fiscal year, the fund gained 22.95%, outperforming the 21.81% gain of the MSCI US IMI Construction & Housing 25/50 Index, as well as the broad-based S&P 500® index. Versus the industry index, security selection was the primary contributor, especially in the building products industry. Security selection in construction & engineering and home improvement retail also helped. The biggest individual relative contributor was an overweight position in Builders FirstSource (+72%), which was among the fund's biggest holdings. Also adding value was our overweighting in Lowe’s, which gained approximately 40%. The company was the fund's largest holding on February 28. Another notable relative contributor was Equity Lifestyle Properties (+34%), a position not held at the beginning or end of the period. Conversely, the biggest detractors from performance versus the industry index were an underweighting and stock selection in residential REITs (real estate investment trusts). Security selection in homebuilding and home furnishings also hurt the fund's relative result. Our biggest individual detractor versus the industry index was an out-of-index stake in Tempur Sealy International (-27%), a position we established during the past 12 months. Also hindering performance was Floor & Décor Holding, which returned -20%. Floor & Décor was a new addition to the portfolio and a top-10 position on February 28. Avoiding AvalonBay Communities, an index component that gained 40%, also hurt relative performance. Notable changes in portfolio positioning over the period include decreased exposure to the homebuilding subindustry and a higher allocation to home improvement retail.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 September 7, 2021, Jordan Michaels assumed co-management responsibilities for the fund. On January 1, 2022, Neil Nabar came off of the fund, leaving Jordan Michaels as sole portfolio manager.Construction and Housing Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
Lowe's Companies, Inc. | 17.4 |
The Home Depot, Inc. | 16.6 |
Johnson Controls International PLC | 4.8 |
Equity Residential (SBI) | 4.4 |
Invitation Homes, Inc. | 4.2 |
Vulcan Materials Co. | 3.6 |
Mid-America Apartment Communities, Inc. | 3.6 |
Builders FirstSource, Inc. | 3.6 |
Washington REIT (SBI) | 3.0 |
Floor & Decor Holdings, Inc. Class A | 2.9 |
64.1 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Specialty Retail | 38.1% | |
Building Products | 20.2% | |
Equity Real Estate Investment Trusts (Reits) | 15.2% | |
Household Durables | 10.3% | |
Construction & Engineering | 6.8% | |
All Others* | 9.4% |
* Includes short-term investments and net other assets (liabilities).
Construction and Housing Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 99.9% | |||
Shares | Value | ||
Building Products - 20.2% | |||
Building Products - 20.2% | |||
Apogee Enterprises, Inc. (a) | 171,400 | $7,724,998 | |
Armstrong World Industries, Inc. | 73,700 | 6,515,080 | |
Builders FirstSource, Inc. (b) | 342,735 | 25,506,339 | |
Carrier Global Corp. | 240,400 | 10,789,152 | |
Fortune Brands Home & Security, Inc. | 138,100 | 12,000,890 | |
Johnson Controls International PLC | 525,451 | 34,133,297 | |
Resideo Technologies, Inc. (b) | 142,100 | 3,657,654 | |
Simpson Manufacturing Co. Ltd. | 88,700 | 10,511,837 | |
The AZEK Co., Inc. (b) | 277,000 | 8,168,730 | |
Trane Technologies PLC | 106,900 | 16,455,117 | |
UFP Industries, Inc. | 99,426 | 8,525,780 | |
143,988,874 | |||
Chemicals - 1.2% | |||
Specialty Chemicals - 1.2% | |||
PPG Industries, Inc. | 26,500 | 3,536,425 | |
Sherwin-Williams Co. | 18,200 | 4,788,966 | |
8,325,391 | |||
Construction & Engineering - 6.8% | |||
Construction & Engineering - 6.8% | |||
Comfort Systems U.S.A., Inc. | 45,629 | 3,923,181 | |
EMCOR Group, Inc. | 41,870 | 4,837,660 | |
Fluor Corp. (b) | 155,400 | 3,365,964 | |
Granite Construction, Inc. (a) | 167,818 | 5,079,851 | |
Quanta Services, Inc. | 98,699 | 10,752,269 | |
Willscot Mobile Mini Holdings (b) | 574,650 | 20,417,315 | |
48,376,240 | |||
Construction Materials - 4.2% | |||
Construction Materials - 4.2% | |||
Summit Materials, Inc. (b) | 135,414 | 4,227,625 | |
Vulcan Materials Co. | 143,076 | 25,961,140 | |
30,188,765 | |||
Equity Real Estate Investment Trusts (REITs) - 15.2% | |||
Diversified REITs - 3.0% | |||
Washington REIT (SBI) | 923,500 | 21,572,960 | |
Residential REITs - 12.2% | |||
Equity Residential (SBI) | 365,000 | 31,134,500 | |
Invitation Homes, Inc. | 794,600 | 30,035,880 | |
Mid-America Apartment Communities, Inc. | 124,800 | 25,535,328 | |
86,705,708 | |||
TOTAL EQUITY REAL ESTATE INVESTMENT TRUSTS (REITS) | 108,278,668 | ||
Household Durables - 10.3% | |||
Home Furnishings - 1.9% | |||
Tempur Sealy International, Inc. | 395,700 | 13,062,057 | |
Homebuilding - 8.0% | |||
Blu Investments LLC (b)(c)(d) | 11,990,913 | 3,717 | |
D.R. Horton, Inc. | 60,456 | 5,162,942 | |
Installed Building Products, Inc. (a) | 97,438 | 9,422,255 | |
KB Home | 72,500 | 2,799,225 | |
NVR, Inc. (b) | 2,349 | 11,647,376 | |
PulteGroup, Inc. | 308,185 | 15,304,467 | |
Toll Brothers, Inc. | 237,100 | 12,865,046 | |
57,205,028 | |||
Household Appliances - 0.4% | |||
Whirlpool Corp. | 14,700 | 2,958,669 | |
TOTAL HOUSEHOLD DURABLES | 73,225,754 | ||
IT Services - 0.3% | |||
Internet Services & Infrastructure - 0.3% | |||
Cyxtera Technologies, Inc. (d) | 200,000 | 2,434,000 | |
Real Estate Management & Development - 0.9% | |||
Diversified Real Estate Activities - 0.4% | |||
The RMR Group, Inc. | 95,160 | 2,772,962 | |
Real Estate Services - 0.5% | |||
Cushman & Wakefield PLC (b) | 180,895 | 3,965,218 | |
TOTAL REAL ESTATE MANAGEMENT & DEVELOPMENT | 6,738,180 | ||
Specialty Retail - 38.1% | |||
Home Improvement Retail - 36.9% | |||
Floor & Decor Holdings, Inc. Class A (b) | 216,800 | 20,730,416 | |
Lowe's Companies, Inc. | 560,395 | 123,880,919 | |
The Home Depot, Inc. | 375,090 | 118,464,675 | |
263,076,010 | |||
Homefurnishing Retail - 1.2% | |||
Williams-Sonoma, Inc. | 60,600 | 8,778,516 | |
TOTAL SPECIALTY RETAIL | 271,854,526 | ||
Trading Companies & Distributors - 2.7% | |||
Trading Companies & Distributors - 2.7% | |||
Beacon Roofing Supply, Inc. (b) | 325,903 | 19,453,150 | |
TOTAL COMMON STOCKS | |||
(Cost $536,012,882) | 712,863,548 | ||
Money Market Funds - 1.1% | |||
Fidelity Cash Central Fund 0.07% (e) | 5,376,603 | 5,377,678 | |
Fidelity Securities Lending Cash Central Fund 0.07% (e)(f) | 2,013,949 | 2,014,150 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $7,391,828) | 7,391,828 | ||
TOTAL INVESTMENT IN SECURITIES - 101.0% | |||
(Cost $543,404,710) | 720,255,376 | ||
NET OTHER ASSETS (LIABILITIES) - (1.0)% | (6,917,078) | ||
NET ASSETS - 100% | $713,338,298 |
Legend
(a) Security or a portion of the security is on loan at period end.
(b) Non-income producing
(c) Level 3 security
(d) Restricted securities (including private placements) - 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 $2,437,717 or 0.3% 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 |
Blu Investments LLC | 5/21/20 | $20,739 |
Cyxtera Technologies, Inc. | 2/21/21 | $2,000,000 |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $2,984,621 | $236,763,820 | $234,370,763 | $3,157 | $-- | $-- | $5,377,678 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | -- | 80,479,202 | 78,465,052 | 216,885 | -- | -- | 2,014,150 | 0.0% |
Total | $2,984,621 | $317,243,022 | $312,835,815 | $220,042 | $-- | $-- | $7,391,828 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $712,863,548 | $712,859,831 | $-- | $3,717 |
Money Market Funds | 7,391,828 | 7,391,828 | -- | -- |
Total Investments in Securities: | $720,255,376 | $720,251,659 | $-- | $3,717 |
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, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $1,991,175) — See accompanying schedule: Unaffiliated issuers (cost $536,012,882) | $712,863,548 | |
Fidelity Central Funds (cost $7,391,828) | 7,391,828 | |
Total Investment in Securities (cost $543,404,710) | $720,255,376 | |
Receivable for investments sold | 846,243 | |
Receivable for fund shares sold | 883,733 | |
Dividends receivable | 169,944 | |
Distributions receivable from Fidelity Central Funds | 387 | |
Prepaid expenses | 1,605 | |
Other receivables | 7,962 | |
Total assets | 722,165,250 | |
Liabilities | ||
Payable for investments purchased | $1,008,938 | |
Payable for fund shares redeemed | 5,291,908 | |
Accrued management fee | 338,977 | |
Other affiliated payables | 134,924 | |
Other payables and accrued expenses | 38,055 | |
Collateral on securities loaned | 2,014,150 | |
Total liabilities | 8,826,952 | |
Net Assets | $713,338,298 | |
Net Assets consist of: | ||
Paid in capital | $541,297,090 | |
Total accumulated earnings (loss) | 172,041,208 | |
Net Assets | $713,338,298 | |
Net Asset Value, offering price and redemption price per share ($713,338,298 ÷ 7,943,352 shares) | $89.80 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $8,186,787 | |
Income from Fidelity Central Funds (including $216,885 from security lending) | 220,042 | |
Total income | 8,406,829 | |
Expenses | ||
Management fee | $3,286,430 | |
Transfer agent fees | 1,006,125 | |
Accounting fees | 227,949 | |
Custodian fees and expenses | 13,721 | |
Independent trustees' fees and expenses | 2,030 | |
Registration fees | 103,163 | |
Audit | 37,950 | |
Legal | 335 | |
Interest | 359 | |
Miscellaneous | 2,356 | |
Total expenses before reductions | 4,680,418 | |
Expense reductions | (14,859) | |
Total expenses after reductions | 4,665,559 | |
Net investment income (loss) | 3,741,270 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 26,178,157 | |
Total net realized gain (loss) | 26,178,157 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | 24,793,518 | |
Unfunded commitments | 162,200 | |
Total change in net unrealized appreciation (depreciation) | 24,955,718 | |
Net gain (loss) | 51,133,875 | |
Net increase (decrease) in net assets resulting from operations | $54,875,145 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $3,741,270 | $2,764,446 |
Net realized gain (loss) | 26,178,157 | 11,232,483 |
Change in net unrealized appreciation (depreciation) | 24,955,718 | 80,379,638 |
Net increase (decrease) in net assets resulting from operations | 54,875,145 | 94,376,567 |
Distributions to shareholders | (39,900,442) | (15,851,989) |
Share transactions | ||
Proceeds from sales of shares | 712,970,980 | 111,965,826 |
Reinvestment of distributions | 37,862,407 | 15,043,485 |
Cost of shares redeemed | (395,931,225) | (180,977,827) |
Net increase (decrease) in net assets resulting from share transactions | 354,902,162 | (53,968,516) |
Total increase (decrease) in net assets | 369,876,865 | 24,556,062 |
Net Assets | ||
Beginning of period | 343,461,433 | 318,905,371 |
End of period | $713,338,298 | $343,461,433 |
Other Information | ||
Shares | ||
Sold | 7,347,600 | 1,731,273 |
Issued in reinvestment of distributions | 384,753 | 305,680 |
Redeemed | (4,219,107) | (3,052,385) |
Net increase (decrease) | 3,513,246 | (1,015,432) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Construction and Housing Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $77.53 | $58.56 | $54.22 | $59.88 | $61.70 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .57 | .59 | .53 | .49 | .44 |
Net realized and unrealized gain (loss) | 17.59 | 21.82 | 8.71 | 1.32 | 6.58 |
Total from investment operations | 18.16 | 22.41 | 9.24 | 1.81 | 7.02 |
Distributions from net investment income | (.53) | (.61) | (.60) | (.55) | (.30) |
Distributions from net realized gain | (5.36) | (2.83) | (4.31) | (6.92) | (8.53) |
Total distributions | (5.89) | (3.44) | (4.90)D | (7.47) | (8.84)D |
Redemption fees added to paid in capitalB | – | – | – | – | –E |
Net asset value, end of period | $89.80 | $77.53 | $58.56 | $54.22 | $59.88 |
Total ReturnF | 22.95% | 41.70% | 17.10% | 4.03% | 11.07% |
Ratios to Average Net AssetsC,G,H | |||||
Expenses before reductions | .75% | .78% | .79% | .80% | .80% |
Expenses net of fee waivers, if any | .75% | .78% | .79% | .80% | .80% |
Expenses net of all reductions | .75% | .77% | .79% | .79% | .79% |
Net investment income (loss) | .60% | .94% | .88% | .86% | .69% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $713,338 | $343,461 | $318,905 | $225,255 | $331,418 |
Portfolio turnover rateI | 70% | 93% | 161% | 90% | 56% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Consumer Discretionary Portfolio | 1.88% | 15.82% | 14.91% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Consumer Discretionary Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789799597_740.jpg)
Period Ending Values | ||
$40,125 | Consumer Discretionary Portfolio | |
$39,037 | S&P 500® Index |
Consumer Discretionary Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Katherine Shaw: For the fiscal year ending February 28, 2022, the fund gained 1.88%, underperforming the 5.37% gain of the MSCI US IMI Consumer Discretionary 25/50 Index, as well as the broad-based S&P 500® index. The primary detractor from performance versus the sector index was an underweighting in automobile manufacturers. Stock selection in internet & direct marketing retail and an overweighting in apparel, accessories & luxury goods also hurt. The biggest individual relative detractor was an underweight position in Tesla (+29%), which was among the fund's biggest holdings. Another notable relative detractor was an outsized stake in Penn National Gaming (-56%). Avoiding Ford Motor, an index component that gained about 52%, also hurt relative performance. In contrast, the biggest contributor to performance versus the sector index was our stock selection in apparel, accessories & luxury goods. An underweighting in leisure products and stock picks in hotels, resorts & cruise lines also bolstered the fund's relative result. The biggest individual relative contributor was an overweight position in Capri Holdings (+45%). Capri Holdings was among our largest holdings. Our second-largest relative contributor this period was avoiding Peloton Interactive, an index component that returned -76%. Another notable relative contributor was an overweighting in Marriott International (+14%). This period we increased our stake. Notable changes in positioning include increased exposure to the automobile manufacturers subindustry and a lower allocation to restaurants.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, 2022
% of fund's net assets | |
Amazon.com, Inc. | 23.8 |
Tesla, Inc. | 10.4 |
The Home Depot, Inc. | 4.3 |
Capri Holdings Ltd. | 4.3 |
NIKE, Inc. Class B | 4.1 |
Lowe's Companies, Inc. | 4.1 |
Booking Holdings, Inc. | 2.8 |
PVH Corp. | 2.2 |
Hilton Worldwide Holdings, Inc. | 2.1 |
Burlington Stores, Inc. | 2.1 |
60.2 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Internet & Direct Marketing Retail | 25.5% | |
Specialty Retail | 19.6% | |
Textiles, Apparel & Luxury Goods | 18.2% | |
Hotels, Restaurants & Leisure | 17.1% | |
Automobiles | 10.9% | |
All Others* | 8.7% |
* Includes short-term investments and net other assets (liabilities).
Consumer Discretionary Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 100.9% | |||
Shares | Value | ||
Auto Components - 0.5% | |||
Auto Parts & Equipment - 0.5% | |||
Adient PLC (a) | 44,600 | $1,995,850 | |
Automobiles - 10.9% | |||
Automobile Manufacturers - 10.9% | |||
Ferrari NV | 7,614 | 1,639,370 | |
Rivian Automotive, Inc. | 5,900 | 398,604 | |
Tesla, Inc. (a) | 50,200 | 43,695,586 | |
45,733,560 | |||
Building Products - 0.3% | |||
Building Products - 0.3% | |||
The AZEK Co., Inc. (a) | 42,600 | 1,256,274 | |
Commercial Services & Supplies - 0.2% | |||
Diversified Support Services - 0.2% | |||
Copart, Inc. (a) | 8,658 | 1,063,895 | |
Food & Staples Retailing - 0.8% | |||
Food Distributors - 0.8% | |||
Performance Food Group Co. (a) | 61,992 | 3,474,032 | |
Hotels, Restaurants & Leisure - 17.1% | |||
Casinos & Gaming - 3.8% | |||
Caesars Entertainment, Inc. (a) | 72,649 | 6,116,319 | |
Churchill Downs, Inc. | 31,246 | 7,526,224 | |
Penn National Gaming, Inc. (a) | 42,089 | 2,161,270 | |
15,803,813 | |||
Hotels, Resorts & Cruise Lines - 8.0% | |||
Airbnb, Inc. Class A (a) | 15,500 | 2,348,095 | |
Booking Holdings, Inc. (a) | 5,350 | 11,621,538 | |
Hilton Worldwide Holdings, Inc. (a) | 60,100 | 8,946,486 | |
Lindblad Expeditions Holdings (a) | 88,623 | 1,571,286 | |
Marriott International, Inc. Class A (a) | 51,500 | 8,762,210 | |
33,249,615 | |||
Leisure Facilities - 0.9% | |||
Planet Fitness, Inc. (a) | 23,809 | 2,014,956 | |
Vail Resorts, Inc. | 7,212 | 1,879,087 | |
3,894,043 | |||
Restaurants - 4.4% | |||
ARAMARK Holdings Corp. | 90,182 | 3,333,127 | |
Brinker International, Inc. (a) | 32,500 | 1,382,550 | |
Chipotle Mexican Grill, Inc. (a) | 2,922 | 4,451,229 | |
Domino's Pizza, Inc. | 6,200 | 2,679,702 | |
Dutch Bros, Inc. (b) | 5,500 | 265,155 | |
McDonald's Corp. | 10,016 | 2,451,616 | |
Noodles & Co. (a) | 192,233 | 1,314,874 | |
Restaurant Brands International, Inc. | 23,500 | 1,315,444 | |
Ruth's Hospitality Group, Inc. | 26,822 | 665,454 | |
Wingstop, Inc. (b) | 4,300 | 625,005 | |
18,484,156 | |||
TOTAL HOTELS, RESTAURANTS & LEISURE | 71,431,627 | ||
Household Durables - 1.9% | |||
Home Furnishings - 0.4% | |||
Tempur Sealy International, Inc. | 50,400 | 1,663,704 | |
Homebuilding - 1.5% | |||
D.R. Horton, Inc. | 36,681 | 3,132,557 | |
Lennar Corp. Class A | 35,728 | 3,211,233 | |
6,343,790 | |||
TOTAL HOUSEHOLD DURABLES | 8,007,494 | ||
Interactive Media & Services - 0.6% | |||
Interactive Media & Services - 0.6% | |||
Alphabet, Inc. Class A (a) | 894 | 2,414,819 | |
Internet & Direct Marketing Retail - 25.5% | |||
Internet & Direct Marketing Retail - 25.5% | |||
Amazon.com, Inc. (a) | 32,435 | 99,616,316 | |
eBay, Inc. | 86,100 | 4,700,199 | |
Farfetch Ltd. Class A (a) | 30,400 | 579,120 | |
Global-e Online Ltd. (a) | 28,100 | 1,099,834 | |
Wayfair LLC Class A (a) | 6,912 | 973,693 | |
106,969,162 | |||
Multiline Retail - 4.8% | |||
Department Stores - 0.7% | |||
Kohl's Corp. | 24,789 | 1,378,764 | |
Nordstrom, Inc. (a) | 75,300 | 1,561,722 | |
2,940,486 | |||
General Merchandise Stores - 4.1% | |||
Dollar General Corp. | 27,871 | 5,527,934 | |
Dollar Tree, Inc. (a) | 35,212 | 5,002,921 | |
Ollie's Bargain Outlet Holdings, Inc. (a)(b) | 56,282 | 2,430,257 | |
Target Corp. | 20,400 | 4,075,308 | |
17,036,420 | |||
TOTAL MULTILINE RETAIL | 19,976,906 | ||
Road & Rail - 0.5% | |||
Trucking - 0.5% | |||
Lyft, Inc. (a) | 51,000 | 1,985,940 | |
Specialty Retail - 19.6% | |||
Apparel Retail - 7.3% | |||
American Eagle Outfitters, Inc. (b) | 233,206 | 4,915,982 | |
Aritzia, Inc. (a) | 32,600 | 1,239,443 | |
Burlington Stores, Inc. (a) | 39,118 | 8,836,365 | |
Ross Stores, Inc. | 47,627 | 4,352,632 | |
TJX Companies, Inc. | 132,613 | 8,765,719 | |
Victoria's Secret & Co. (a) | 43,433 | 2,329,312 | |
30,439,453 | |||
Automotive Retail - 0.4% | |||
Carvana Co. Class A (a) | 12,900 | 1,941,063 | |
Home Improvement Retail - 9.4% | |||
Floor & Decor Holdings, Inc. Class A (a) | 44,049 | 4,211,965 | |
Lowe's Companies, Inc. | 76,434 | 16,896,500 | |
The Home Depot, Inc. | 57,317 | 18,102,428 | |
39,210,893 | |||
Specialty Stores - 2.5% | |||
Academy Sports & Outdoors, Inc. | 36,010 | 1,165,644 | |
Bath & Body Works, Inc. | 32,700 | 1,745,199 | |
Dick's Sporting Goods, Inc. (b) | 22,400 | 2,352,000 | |
Five Below, Inc. (a) | 24,879 | 4,070,453 | |
Sally Beauty Holdings, Inc. (a) | 63,100 | 1,090,368 | |
10,423,664 | |||
TOTAL SPECIALTY RETAIL | 82,015,073 | ||
Textiles, Apparel & Luxury Goods - 18.2% | |||
Apparel, Accessories & Luxury Goods - 12.0% | |||
adidas AG | 6,505 | 1,538,055 | |
Canada Goose Holdings, Inc. (a) | 19,134 | 500,881 | |
Capri Holdings Ltd. (a) | 264,795 | 17,937,213 | |
Kontoor Brands, Inc. | 36,800 | 1,823,072 | |
Levi Strauss & Co. Class A | 64,600 | 1,463,190 | |
lululemon athletica, Inc. (a) | 15,130 | 4,840,692 | |
LVMH Moet Hennessy Louis Vuitton SE | 2,784 | 2,045,976 | |
PVH Corp. | 93,973 | 9,199,017 | |
Ralph Lauren Corp. | 16,838 | 2,223,290 | |
Tapestry, Inc. | 213,082 | 8,715,054 | |
50,286,440 | |||
Footwear - 6.2% | |||
Crocs, Inc. (a) | 12,500 | 1,046,625 | |
Deckers Outdoor Corp. (a) | 22,327 | 6,444,465 | |
NIKE, Inc. Class B | 126,030 | 17,209,397 | |
On Holding AG (b) | 3,200 | 77,920 | |
Skechers U.S.A., Inc. Class A (sub. vtg.) (a) | 21,200 | 974,776 | |
25,753,183 | |||
TOTAL TEXTILES, APPAREL & LUXURY GOODS | 76,039,623 | ||
TOTAL COMMON STOCKS | |||
(Cost $217,818,097) | 422,364,255 | ||
Money Market Funds - 1.6% | |||
Fidelity Securities Lending Cash Central Fund 0.07% (c)(d) | |||
(Cost $6,819,964) | 6,819,282 | 6,819,964 | |
TOTAL INVESTMENT IN SECURITIES - 102.5% | |||
(Cost $224,638,061) | 429,184,219 | ||
NET OTHER ASSETS (LIABILITIES) - (2.5)% | (10,509,655) | ||
NET ASSETS - 100% | $418,674,564 |
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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $2,465,893 | $166,223,857 | $168,689,750 | $1,020 | $-- | $-- | $-- | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 3,700,614 | 102,760,679 | 99,641,329 | 10,897 | -- | -- | 6,819,964 | 0.0% |
Total | $6,166,507 | $268,984,536 | $268,331,079 | $11,917 | $-- | $-- | $6,819,964 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $422,364,255 | $418,780,224 | $3,584,031 | $-- |
Money Market Funds | 6,819,964 | 6,819,964 | -- | -- |
Total Investments in Securities: | $429,184,219 | $425,600,188 | $3,584,031 | $-- |
See accompanying notes which are an integral part of the financial statements.
Consumer Discretionary Portfolio
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $6,584,775) — See accompanying schedule: Unaffiliated issuers (cost $217,818,097) | $422,364,255 | |
Fidelity Central Funds (cost $6,819,964) | 6,819,964 | |
Total Investment in Securities (cost $224,638,061) | $429,184,219 | |
Receivable for investments sold | 2,000,167 | |
Receivable for fund shares sold | 217,233 | |
Dividends receivable | 86,531 | |
Distributions receivable from Fidelity Central Funds | 778 | |
Prepaid expenses | 3,478 | |
Other receivables | 22,719 | |
Total assets | 431,515,125 | |
Liabilities | ||
Payable to custodian bank | $4,421,030 | |
Payable for investments purchased | 329,071 | |
Payable for fund shares redeemed | 964,427 | |
Accrued management fee | 190,555 | |
Other affiliated payables | 82,111 | |
Other payables and accrued expenses | 37,692 | |
Collateral on securities loaned | 6,815,675 | |
Total liabilities | 12,840,561 | |
Net Assets | $418,674,564 | |
Net Assets consist of: | ||
Paid in capital | $189,356,200 | |
Total accumulated earnings (loss) | 229,318,364 | |
Net Assets | $418,674,564 | |
Net Asset Value, offering price and redemption price per share ($418,674,564 ÷ 6,621,919 shares) | $63.23 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $3,146,555 | |
Income from Fidelity Central Funds (including $10,897 from security lending) | 11,917 | |
Total income | 3,158,472 | |
Expenses | ||
Management fee | $3,270,591 | |
Transfer agent fees | 945,887 | |
Accounting fees | 227,813 | |
Custodian fees and expenses | 14,073 | |
Independent trustees' fees and expenses | 2,285 | |
Registration fees | 45,596 | |
Audit | 39,787 | |
Legal | 1,992 | |
Interest | 1,991 | |
Miscellaneous | 3,394 | |
Total expenses before reductions | 4,553,409 | |
Expense reductions | (14,660) | |
Total expenses after reductions | 4,538,749 | |
Net investment income (loss) | (1,380,277) | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 69,877,653 | |
Foreign currency transactions | (2,037) | |
Total net realized gain (loss) | 69,875,616 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | (55,773,966) | |
Assets and liabilities in foreign currencies | (498) | |
Total change in net unrealized appreciation (depreciation) | (55,774,464) | |
Net gain (loss) | 14,101,152 | |
Net increase (decrease) in net assets resulting from operations | $12,720,875 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(1,380,277) | $(284,752) |
Net realized gain (loss) | 69,875,616 | 36,446,522 |
Change in net unrealized appreciation (depreciation) | (55,774,464) | 148,643,456 |
Net increase (decrease) in net assets resulting from operations | 12,720,875 | 184,805,226 |
Distributions to shareholders | (57,919,716) | (6,311,869) |
Share transactions | ||
Proceeds from sales of shares | 211,466,743 | 211,985,501 |
Reinvestment of distributions | 54,428,730 | 5,968,009 |
Cost of shares redeemed | (385,959,972) | (214,912,312) |
Net increase (decrease) in net assets resulting from share transactions | (120,064,499) | 3,041,198 |
Total increase (decrease) in net assets | (165,263,340) | 181,534,555 |
Net Assets | ||
Beginning of period | 583,937,904 | 402,403,349 |
End of period | $418,674,564 | $583,937,904 |
Other Information | ||
Shares | ||
Sold | 2,966,018 | 3,649,920 |
Issued in reinvestment of distributions | 780,014 | 90,837 |
Redeemed | (5,710,596) | (3,983,299) |
Net increase (decrease) | (1,964,564) | (242,542) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Consumer Discretionary Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $68.01 | $45.58 | $44.31 | $43.65 | $37.00 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | (.16) | (.03) | .11 | .12 | .16 |
Net realized and unrealized gain (loss) | 1.92 | 23.23 | 2.26 | 1.87 | 8.17 |
Total from investment operations | 1.76 | 23.20 | 2.37 | 1.99 | 8.33 |
Distributions from net investment income | – | – | (.11) | (.15) | (.14) |
Distributions from net realized gain | (6.54) | (.77) | (.99) | (1.18) | (1.54) |
Total distributions | (6.54) | (.77) | (1.10) | (1.33) | (1.68) |
Net asset value, end of period | $63.23 | $68.01 | $45.58 | $44.31 | $43.65 |
Total ReturnD | 1.88% | 50.96% | 5.30% | 4.81% | 22.79% |
Ratios to Average Net AssetsC,E,F | |||||
Expenses before reductions | .73% | .76% | .76% | .78% | .78% |
Expenses net of fee waivers, if any | .73% | .76% | .76% | .77% | .78% |
Expenses net of all reductions | .73% | .75% | .76% | .77% | .77% |
Net investment income (loss) | (.22)% | (.06)% | .23% | .27% | .40% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $418,675 | $583,938 | $402,403 | $433,188 | $819,937 |
Portfolio turnover rateG | 38% | 55% | 41%H | 46%H | 74% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
G Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
H 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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Leisure Portfolio | 7.53% | 15.05% | 13.47% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Leisure Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789797074_740.jpg)
Period Ending Values | ||
$35,396 | Leisure Portfolio | |
$39,037 | S&P 500® Index |
Leisure Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Will Hilkert: For the fiscal year ending February 28, 2022, the fund gained 7.53%, outperforming the -1.32% return of the MSCI U.S. IMI Consumer Services 25/50 Index, but underperforming the broad-based S&P 500® index. Versus the industry index, security selection was the primary contributor, especially in the restaurants category. Also helping was security selection and an underweighting in casinos & gaming and stock picks and an overweighting in hotels, resorts & cruise lines. The biggest individual relative contributor was an underweight position in index component Starbucks (-14%). This period we reduced our stake. Also adding value was our outsized stake in Dominos Pizza, which gained roughly 26%. Dominos Pizza was among our biggest holdings. Another notable relative contributor was an underweighting in Draftkings (-62%), a stake we established the past year. Conversely, the largest detractor from performance versus the industry index was our security selection in data processing & outsourced services. An underweighting in restaurants and stock selection in trucking also hindered the fund's relative result. The biggest individual relative detractor was an underweight position in McDonalds (+21%), which was the fund's largest holding. Also hindering performance was our lighter-than-index stake in Expedia, which gained 14%. Expedia was not held at period end. The fund's non-index stake in Uber Technologies, a position not held at period end, returned -13%. Notable changes in positioning include increased exposure to the hotels, resorts & cruise lines subindustry and a lower allocation to restaurants.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 March 1, 2021, Will Hilkert became sole portfolio manager of the fund after having served as co-manager with Becky Baker since August 2020.Leisure Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
McDonald's Corp. | 15.3 |
Booking Holdings, Inc. | 12.3 |
Marriott International, Inc. Class A | 9.6 |
Hilton Worldwide Holdings, Inc. | 7.3 |
Chipotle Mexican Grill, Inc. | 5.0 |
Domino's Pizza, Inc. | 4.7 |
Airbnb, Inc. Class A | 4.6 |
Caesars Entertainment, Inc. | 4.5 |
Yum! Brands, Inc. | 4.0 |
Restaurant Brands International, Inc. | 4.0 |
71.3 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Hotels, Restaurants & Leisure | 89.7% | |
IT Services | 2.5% | |
Food & Staples Retailing | 2.2% | |
Media | 2.2% | |
Entertainment | 1.2% | |
All Others* | 2.2% |
* Includes short-term investments and net other assets (liabilities).
Leisure Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 99.8% | |||
Shares | Value | ||
Commercial Services & Supplies - 0.5% | |||
Diversified Support Services - 0.5% | |||
Cintas Corp. | 7,700 | $2,889,964 | |
Diversified Consumer Services - 0.6% | |||
Education Services - 0.2% | |||
Chegg, Inc. (a)(b) | 40,500 | 1,266,435 | |
Specialized Consumer Services - 0.4% | |||
OneSpaWorld Holdings Ltd. (a) | 254,500 | 2,631,530 | |
TOTAL DIVERSIFIED CONSUMER SERVICES | 3,897,965 | ||
Entertainment - 1.2% | |||
Interactive Home Entertainment - 0.3% | |||
Playstudios, Inc. Class A (a)(b) | 399,400 | 1,821,264 | |
Movies & Entertainment - 0.9% | |||
Live Nation Entertainment, Inc. (a) | 50,800 | 6,137,656 | |
TOTAL ENTERTAINMENT | 7,958,920 | ||
Food & Staples Retailing - 2.2% | |||
Food Distributors - 1.5% | |||
U.S. Foods Holding Corp. (a) | 244,600 | 9,561,414 | |
Food Retail - 0.7% | |||
Alimentation Couche-Tard, Inc. Class A (multi-vtg.) | 117,900 | 4,627,633 | |
TOTAL FOOD & STAPLES RETAILING | 14,189,047 | ||
Hotels, Restaurants & Leisure - 89.7% | |||
Casinos & Gaming - 12.0% | |||
Bally's Corp. (a)(b) | 145,200 | 5,230,104 | |
Caesars Entertainment, Inc. (a) | 343,949 | 28,957,066 | |
Churchill Downs, Inc. | 82,048 | 19,762,902 | |
DraftKings, Inc. Class A (a)(b) | 90,000 | 2,131,200 | |
Flutter Entertainment PLC (a) | 32,300 | 4,650,262 | |
Las Vegas Sands Corp. (a) | 334,587 | 14,340,399 | |
Penn National Gaming, Inc. (a) | 45,500 | 2,336,425 | |
77,408,358 | |||
Hotels, Resorts & Cruise Lines - 35.9% | |||
Airbnb, Inc. Class A (a) | 196,000 | 29,692,040 | |
Booking Holdings, Inc. (a) | 36,776 | 79,886,666 | |
Hilton Worldwide Holdings, Inc. (a) | 317,232 | 47,223,156 | |
Lindblad Expeditions Holdings (a) | 345,400 | 6,123,942 | |
Marriott International, Inc. Class A (a) | 364,125 | 61,952,228 | |
Marriott Vacations Worldwide Corp. | 46,413 | 7,457,177 | |
232,335,209 | |||
Leisure Facilities - 1.6% | |||
Vail Resorts, Inc. | 41,182 | 10,729,970 | |
Restaurants - 40.2% | |||
Brinker International, Inc. (a) | 222,400 | 9,460,896 | |
Chipotle Mexican Grill, Inc. (a) | 21,209 | 32,308,730 | |
Domino's Pizza, Inc. | 69,542 | 30,056,748 | |
Dutch Bros, Inc. (b) | 100,000 | 4,821,000 | |
First Watch Restaurant Group, Inc. (b) | 199,600 | 2,896,196 | |
McDonald's Corp. | 404,893 | 99,105,658 | |
Noodles & Co. (a) | 208,000 | 1,422,720 | |
Restaurant Brands International, Inc. | 458,874 | 25,686,083 | |
Ruth's Hospitality Group, Inc. (b) | 341,200 | 8,465,172 | |
Starbucks Corp. | 165,056 | 15,150,490 | |
Texas Roadhouse, Inc. Class A | 48,100 | 4,565,171 | |
Yum! Brands, Inc. | 212,300 | 26,023,734 | |
259,962,598 | |||
TOTAL HOTELS, RESTAURANTS & LEISURE | 580,436,135 | ||
Internet & Direct Marketing Retail - 0.1% | |||
Internet & Direct Marketing Retail - 0.1% | |||
Grab Holdings Ltd. (c) | 101,700 | 585,792 | |
IT Services - 2.5% | |||
Data Processing & Outsourced Services - 2.5% | |||
Flywire Corp. (a)(b) | 174,700 | 4,727,382 | |
Global Payments, Inc. | 85,200 | 11,363,976 | |
16,091,358 | |||
Media - 2.2% | |||
Broadcasting - 2.2% | |||
Liberty Media Corp. Liberty Media Class A (a) | 253,100 | 14,214,096 | |
Specialty Retail - 0.3% | |||
Automotive Retail - 0.3% | |||
Diversified Royalty Corp. (b) | 834,100 | 2,046,589 | |
Textiles, Apparel & Luxury Goods - 0.5% | |||
Apparel, Accessories & Luxury Goods - 0.5% | |||
LVMH Moet Hennessy Louis Vuitton SE | 4,500 | 3,307,073 | |
TOTAL COMMON STOCKS | |||
(Cost $475,256,346) | 645,616,939 | ||
Money Market Funds - 3.2% | |||
Fidelity Cash Central Fund 0.07% (d) | 1,262,292 | 1,262,544 | |
Fidelity Securities Lending Cash Central Fund 0.07% (d)(e) | 19,542,296 | 19,544,251 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $20,806,795) | 20,806,795 | ||
TOTAL INVESTMENT IN SECURITIES - 103.0% | |||
(Cost $496,063,141) | 666,423,734 | ||
NET OTHER ASSETS (LIABILITIES) - (3.0)% | (19,623,472) | ||
NET ASSETS - 100% | $646,800,262 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Restricted securities (including private placements) - 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 $585,792 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 |
Grab Holdings Ltd. | 4/12/21 | $1,017,000 |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $9,740,260 | $162,721,253 | $171,198,969 | $1,212 | $-- | $-- | $1,262,544 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 4,458,000 | 199,988,612 | 184,902,361 | 165,177 | -- | -- | 19,544,251 | 0.1% |
Total | $14,198,260 | $362,709,865 | $356,101,330 | $166,389 | $-- | $-- | $20,806,795 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $645,616,939 | $637,659,604 | $7,957,335 | $-- |
Money Market Funds | 20,806,795 | 20,806,795 | -- | -- |
Total Investments in Securities: | $666,423,734 | $658,466,399 | $7,957,335 | $-- |
See accompanying notes which are an integral part of the financial statements.
Leisure Portfolio
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $19,040,441) — See accompanying schedule: Unaffiliated issuers (cost $475,256,346) | $645,616,939 | |
Fidelity Central Funds (cost $20,806,795) | 20,806,795 | |
Total Investment in Securities (cost $496,063,141) | $666,423,734 | |
Foreign currency held at value (cost $8,166) | 8,164 | |
Receivable for fund shares sold | 331,183 | |
Dividends receivable | 687,079 | |
Distributions receivable from Fidelity Central Funds | 69,266 | |
Prepaid expenses | 2,531 | |
Other receivables | 11,303 | |
Total assets | 667,533,260 | |
Liabilities | ||
Payable for investments purchased | $213,055 | |
Payable for fund shares redeemed | 545,653 | |
Accrued management fee | 290,631 | |
Other affiliated payables | 104,690 | |
Other payables and accrued expenses | 34,718 | |
Collateral on securities loaned | 19,544,251 | |
Total liabilities | 20,732,998 | |
Net Assets | $646,800,262 | |
Net Assets consist of: | ||
Paid in capital | $462,188,094 | |
Total accumulated earnings (loss) | 184,612,168 | |
Net Assets | $646,800,262 | |
Net Asset Value, offering price and redemption price per share ($646,800,262 ÷ 39,498,013 shares) | $16.38 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $5,371,644 | |
Income from Fidelity Central Funds (including $165,177 from security lending) | 166,389 | |
Total income | 5,538,033 | |
Expenses | ||
Management fee | $3,737,590 | |
Transfer agent fees | 1,115,934 | |
Accounting fees | 252,884 | |
Custodian fees and expenses | 14,004 | |
Independent trustees' fees and expenses | 2,542 | |
Registration fees | 49,422 | |
Audit | 39,690 | |
Legal | 498 | |
Interest | 1,382 | |
Miscellaneous | 3,318 | |
Total expenses before reductions | 5,217,264 | |
Expense reductions | (15,871) | |
Total expenses after reductions | 5,201,393 | |
Net investment income (loss) | 336,640 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 141,342,448 | |
Foreign currency transactions | (5,801) | |
Total net realized gain (loss) | 141,336,647 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | (91,223,897) | |
Assets and liabilities in foreign currencies | (10) | |
Total change in net unrealized appreciation (depreciation) | (91,223,907) | |
Net gain (loss) | 50,112,740 | |
Net increase (decrease) in net assets resulting from operations | $50,449,380 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $336,640 | $2,206,649 |
Net realized gain (loss) | 141,336,647 | 35,065,293 |
Change in net unrealized appreciation (depreciation) | (91,223,907) | 136,340,266 |
Net increase (decrease) in net assets resulting from operations | 50,449,380 | 173,612,208 |
Distributions to shareholders | (140,839,314) | (12,967,558) |
Share transactions | ||
Proceeds from sales of shares | 249,737,495 | 240,729,438 |
Reinvestment of distributions | 130,602,409 | 12,074,974 |
Cost of shares redeemed | (296,858,478) | (190,886,060) |
Net increase (decrease) in net assets resulting from share transactions | 83,481,426 | 61,918,352 |
Total increase (decrease) in net assets | (6,908,508) | 222,563,002 |
Net Assets | ||
Beginning of period | 653,708,770 | 431,145,768 |
End of period | $646,800,262 | $653,708,770 |
Other Information | ||
Shares | ||
Sold | 13,101,449 | 16,202,316 |
Issued in reinvestment of distributions | 7,680,514 | 1,034,599 |
Redeemed | (15,791,115) | (13,765,059) |
Net increase (decrease) | 4,990,848 | 3,471,856 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Leisure Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B | 2018 B |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $18.94 | $13.89 | $14.53 | $16.58 | $14.14 |
Income from Investment Operations | |||||
Net investment income (loss)C,D | .01 | .07 | .12 | .16 | .18 |
Net realized and unrealized gain (loss) | 1.41 | 5.40 | .25 | .39 | 3.31 |
Total from investment operations | 1.42 | 5.47 | .37 | .55 | 3.49 |
Distributions from net investment income | (.02) | (.08) | (.11) | (.16) | (.14) |
Distributions from net realized gain | (3.96) | (.34) | (.89) | (2.44) | (.91) |
Total distributions | (3.98) | (.42) | (1.01)E | (2.60) | (1.05) |
Redemption fees added to paid in capitalC | – | – | – | –F | –F |
Net asset value, end of period | $16.38 | $18.94 | $13.89 | $14.53 | $16.58 |
Total ReturnG | 7.53% | 41.30% | 1.76% | 4.48% | 24.75% |
Ratios to Average Net AssetsD,H,I | |||||
Expenses before reductions | .73% | .77% | .76% | .76% | .77% |
Expenses net of fee waivers, if any | .73% | .77% | .75% | .76% | .77% |
Expenses net of all reductions | .73% | .76% | .75% | .76% | .77% |
Net investment income (loss) | .05% | .48% | .79% | 1.05% | 1.09% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $646,800 | $653,709 | $431,146 | $472,923 | $544,540 |
Portfolio turnover rateJ | 79% | 72% | 53% | 41% | 56% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on August 10, 2018.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
E Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Retailing Portfolio | (1.23)% | 18.37% | 18.42% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Retailing Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789798205_740.jpg)
Period Ending Values | ||
$54,248 | Retailing Portfolio | |
$39,037 | S&P 500® Index |
Retailing Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Boris Shepov: For the fiscal year ending February 28, 2022, the fund returned -1.23%, underperforming the 4.18% gain of the MSCI US IMI Retailing 25/50 Index, as well as the broad-based S&P 500® index. Versus the industry index, security selection was the primary detractor, especially in the department stores category. Subpar investment choices and an underweighting among automotive retail stocks, along with picks in internet & direct marketing retail, also hampered the fund's relative result. Our non-index holding in Farfetch was the portfolio's largest individual relative detractor, due to its -69% result. We added to our stake in the company the past 12 months. Further weighing on the relative performance was an outsized position in The RealReal (-64%). Avoiding AutoZone, an index component that gained about 61%, hurt relative performance as well. Conversely, the biggest contributor to performance versus the industry index was our security selection in hypermarkets & super centers. Also bolstering the fund's relative result was an underweighting in the internet & direct marketing retail segment, followed by an overweighting in department stores. Our top individual relative contributor was an out-of-index stake in BJ’s Wholesale Club (+58%). The fund's non-index exposure to Capri Holdings, which gained 45%, added further value this period. Another notable relative contributor was our smaller-than-index stake in Wayfair (-51%). Meaningful changes in positioning this past year include a higher allocation to both specialty stores and general merchandise stores.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.
Retailing Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
Amazon.com, Inc. | 25.0 |
The Home Depot, Inc. | 10.2 |
Lowe's Companies, Inc. | 9.0 |
Target Corp. | 5.1 |
eBay, Inc. | 4.5 |
Dollar Tree, Inc. | 4.5 |
Burlington Stores, Inc. | 3.1 |
Dollar General Corp. | 3.0 |
Five Below, Inc. | 2.9 |
Ross Stores, Inc. | 2.8 |
70.1 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Specialty Retail | 38.0% | |
Internet & Direct Marketing Retail | 33.4% | |
Multiline Retail | 17.9% | |
Textiles, Apparel & Luxury Goods | 7.3% | |
Interactive Media & Services | 0.8% | |
All Others* | 2.6% |
* Includes short-term investments and net other assets (liabilities).
Retailing Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 99.6% | |||
Shares | Value | ||
Food & Staples Retailing - 0.7% | |||
Hypermarkets & Super Centers - 0.7% | |||
BJ's Wholesale Club Holdings, Inc. (a) | 441,740 | $27,772,194 | |
Hotels, Restaurants & Leisure - 0.7% | |||
Casinos & Gaming - 0.7% | |||
Caesars Entertainment, Inc. (a) | 298,400 | 25,122,296 | |
Interactive Media & Services - 0.8% | |||
Interactive Media & Services - 0.8% | |||
Alphabet, Inc. Class A (a) | 10,400 | 28,091,856 | |
Internet & Direct Marketing Retail - 33.4% | |||
Internet & Direct Marketing Retail - 33.4% | |||
Amazon.com, Inc. (a) | 301,830 | 926,998,405 | |
Chewy, Inc. (a)(b) | 467,100 | 22,019,094 | |
eBay, Inc. | 3,052,900 | 166,657,811 | |
Etsy, Inc. (a) | 123,460 | 19,122,719 | |
Farfetch Ltd. Class A (a)(b) | 1,678,700 | 31,979,235 | |
MercadoLibre, Inc. (a) | 31,100 | 35,038,815 | |
The RealReal, Inc. (a)(b) | 2,925,133 | 26,062,935 | |
thredUP, Inc. (a)(b) | 677,862 | 5,755,048 | |
Wayfair LLC Class A (a) | 37,600 | 5,296,712 | |
1,238,930,774 | |||
Multiline Retail - 17.9% | |||
Department Stores - 4.0% | |||
Kohl's Corp. | 940,400 | 52,305,048 | |
Nordstrom, Inc. (a)(b) | 4,696,100 | 97,397,114 | |
149,702,162 | |||
General Merchandise Stores - 13.9% | |||
Dollar General Corp. | 564,800 | 112,022,432 | |
Dollar Tree, Inc. (a) | 1,168,100 | 165,963,648 | |
Ollie's Bargain Outlet Holdings, Inc. (a)(b) | 1,090,159 | 47,073,066 | |
Target Corp. | 949,700 | 189,721,569 | |
514,780,715 | |||
TOTAL MULTILINE RETAIL | 664,482,877 | ||
Road & Rail - 0.8% | |||
Trucking - 0.8% | |||
Lyft, Inc. (a) | 728,000 | 28,348,320 | |
Specialty Retail - 38.0% | |||
Apparel Retail - 10.2% | |||
American Eagle Outfitters, Inc. (b) | 1,806,800 | 38,087,344 | |
Aritzia, Inc. (a) | 683,400 | 25,982,679 | |
Burlington Stores, Inc. (a)(b) | 512,294 | 115,722,092 | |
Ross Stores, Inc. | 1,142,100 | 104,376,519 | |
TJX Companies, Inc. | 935,000 | 61,803,500 | |
Victoria's Secret & Co. (a)(b) | 555,033 | 29,766,420 | |
375,738,554 | |||
Automotive Retail - 1.0% | |||
Carvana Co. Class A (a) | 250,500 | 37,692,735 | |
Home Improvement Retail - 21.3% | |||
Floor & Decor Holdings, Inc. Class A (a)(b) | 827,337 | 79,109,964 | |
Lowe's Companies, Inc. | 1,502,600 | 332,164,756 | |
The Home Depot, Inc. | 1,197,500 | 378,206,425 | |
789,481,145 | |||
Specialty Stores - 5.5% | |||
Bath & Body Works, Inc. | 1,002,400 | 53,498,088 | |
Five Below, Inc. (a) | 649,700 | 106,297,417 | |
Ulta Beauty, Inc. (a) | 120,900 | 45,277,050 | |
205,072,555 | |||
TOTAL SPECIALTY RETAIL | 1,407,984,989 | ||
Textiles, Apparel & Luxury Goods - 7.3% | |||
Apparel, Accessories & Luxury Goods - 6.3% | |||
Canada Goose Holdings, Inc. (a) | 287,700 | 7,531,271 | |
Capri Holdings Ltd. (a)(b) | 1,344,600 | 91,083,204 | |
lululemon athletica, Inc. (a) | 81,857 | 26,189,329 | |
PVH Corp. | 587,800 | 57,539,742 | |
Tapestry, Inc. | 1,250,900 | 51,161,810 | |
233,505,356 | |||
Footwear - 1.0% | |||
Deckers Outdoor Corp. (a) | 122,200 | 35,271,808 | |
TOTAL TEXTILES, APPAREL & LUXURY GOODS | 268,777,164 | ||
TOTAL COMMON STOCKS | |||
(Cost $2,025,864,554) | 3,689,510,470 | ||
Money Market Funds - 7.1% | |||
Fidelity Securities Lending Cash Central Fund 0.07% (c)(d) | |||
(Cost $262,083,095) | 262,056,889 | 262,083,095 | |
TOTAL INVESTMENT IN SECURITIES - 106.7% | |||
(Cost $2,287,947,649) | 3,951,593,565 | ||
NET OTHER ASSETS (LIABILITIES) - (6.7)% | (247,402,736) | ||
NET ASSETS - 100% | $3,704,190,829 |
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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $17,054,488 | $430,488,068 | $447,542,556 | $4,975 | $-- | $-- | $-- | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 140,878,842 | 1,765,126,023 | 1,643,921,770 | 240,845 | -- | -- | 262,083,095 | 0.7% |
Total | $157,933,330 | $2,195,614,091 | $2,091,464,326 | $245,820 | $-- | $-- | $262,083,095 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $3,689,510,470 | $3,689,510,470 | $-- | $-- |
Money Market Funds | 262,083,095 | 262,083,095 | -- | -- |
Total Investments in Securities: | $3,951,593,565 | $3,951,593,565 | $-- | $-- |
Net unrealized depreciation on unfunded commitments | $(1,090,000) | $-- | $(1,090,000) | $-- |
See accompanying notes which are an integral part of the financial statements.
Retailing Portfolio
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $254,358,286) — See accompanying schedule: Unaffiliated issuers (cost $2,025,864,554) | $3,689,510,470 | |
Fidelity Central Funds (cost $262,083,095) | 262,083,095 | |
Total Investment in Securities (cost $2,287,947,649) | $3,951,593,565 | |
Receivable for investments sold | 34,941,973 | |
Receivable for fund shares sold | 1,123,663 | |
Dividends receivable | 1,325,228 | |
Distributions receivable from Fidelity Central Funds | 17,214 | |
Prepaid expenses | 11,612 | |
Other receivables | 18,056 | |
Total assets | 3,989,031,311 | |
Liabilities | ||
Payable to custodian bank | $2,176,049 | |
Unrealized depreciation on unfunded commitments | 1,090,000 | |
Payable for fund shares redeemed | 4,531,214 | |
Accrued management fee | 1,672,957 | |
Notes payable to affiliates | 12,661,000 | |
Other affiliated payables | 579,728 | |
Other payables and accrued expenses | 50,773 | |
Collateral on securities loaned | 262,078,761 | |
Total liabilities | 284,840,482 | |
Net Assets | $3,704,190,829 | |
Net Assets consist of: | ||
Paid in capital | $1,970,128,235 | |
Total accumulated earnings (loss) | 1,734,062,594 | |
Net Assets | $3,704,190,829 | |
Net Asset Value, offering price and redemption price per share ($3,704,190,829 ÷ 185,948,822 shares) | $19.92 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $27,377,727 | |
Income from Fidelity Central Funds (including $240,845 from security lending) | 245,820 | |
Total income | 27,623,547 | |
Expenses | ||
Management fee | $23,077,734 | |
Transfer agent fees | 6,457,621 | |
Accounting fees | 1,056,335 | |
Custodian fees and expenses | 25,998 | |
Independent trustees' fees and expenses | 15,917 | |
Registration fees | 86,900 | |
Audit | 39,078 | |
Legal | 2,984 | |
Interest | 3,015 | |
Miscellaneous | 20,972 | |
Total expenses before reductions | 30,786,554 | |
Expense reductions | (100,870) | |
Total expenses after reductions | 30,685,684 | |
Net investment income (loss) | (3,062,137) | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 530,798,520 | |
Foreign currency transactions | (26,505) | |
Total net realized gain (loss) | 530,772,015 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | (547,138,562) | |
Unfunded commitments | (1,090,000) | |
Assets and liabilities in foreign currencies | (2,048) | |
Total change in net unrealized appreciation (depreciation) | (548,230,610) | |
Net gain (loss) | (17,458,595) | |
Net increase (decrease) in net assets resulting from operations | $(20,520,732) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(3,062,137) | $(2,404,914) |
Net realized gain (loss) | 530,772,015 | 529,737,589 |
Change in net unrealized appreciation (depreciation) | (548,230,610) | 939,658,602 |
Net increase (decrease) in net assets resulting from operations | (20,520,732) | 1,466,991,277 |
Distributions to shareholders | (645,718,415) | (251,762,516) |
Share transactions | ||
Proceeds from sales of shares | 589,399,734 | 893,605,318 |
Reinvestment of distributions | 608,923,199 | 238,817,402 |
Cost of shares redeemed | (883,831,786) | (990,710,293) |
Net increase (decrease) in net assets resulting from share transactions | 314,491,147 | 141,712,427 |
Total increase (decrease) in net assets | (351,748,000) | 1,356,941,188 |
Net Assets | ||
Beginning of period | 4,055,938,829 | 2,698,997,641 |
End of period | $3,704,190,829 | $4,055,938,829 |
Other Information | ||
Shares | ||
Sold | 24,397,911 | 43,628,691 |
Issued in reinvestment of distributions | 26,457,673 | 10,603,061 |
Redeemed | (37,526,804) | (53,402,342) |
Net increase (decrease) | 13,328,780 | 829,410 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Retailing Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B | 2018 B |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $23.50 | $15.71 | $15.01 | $14.35 | $11.56 |
Income from Investment Operations | |||||
Net investment income (loss)C,D | (.02) | (.01) | .04 | .03 | .04 |
Net realized and unrealized gain (loss) | .11 | 9.35 | 1.02 | .93 | 3.23 |
Total from investment operations | .09 | 9.34 | 1.06 | .96 | 3.27 |
Distributions from net investment income | – | – | (.05) | (.02) | (.03) |
Distributions from net realized gain | (3.67) | (1.55) | (.31) | (.27) | (.45) |
Total distributions | (3.67) | (1.55) | (.36) | (.30)E | (.48) |
Net asset value, end of period | $19.92 | $23.50 | $15.71 | $15.01 | $14.35 |
Total ReturnF | (1.23)% | 59.90% | 7.02% | 6.83% | 28.66% |
Ratios to Average Net AssetsD,G,H | |||||
Expenses before reductions | .70% | .73% | .74% | .76% | .78% |
Expenses net of fee waivers, if any | .70% | .73% | .74% | .75% | .77% |
Expenses net of all reductions | .70% | .73% | .74% | .75% | .77% |
Net investment income (loss) | (.07)% | (.07)% | .26% | .20% | .29% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $3,704,191 | $4,055,939 | $2,698,998 | $3,035,591 | $2,329,366 |
Portfolio turnover rateI | 33% | 46% | 17% | 34% | 24% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on May 11, 2018.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
E Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2022
1. Organization.
Automotive Portfolio, Communication Services Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure 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. Each Fund is authorized to issue an unlimited number of shares. Each Fund offers a single class of shares, with the exception of Communication Services Portfolio. Communication Services Portfolio offers Class A, Class M, Class C, Communication Services, Class I and Class Z shares. Each class of Communication Services Portfolio has equal rights as to assets and voting privileges, and each class has exclusive voting rights with respect to matters that affect that class. Effective June 21, 2021, Class C shares will automatically convert to Class A shares after a holding period of eight years from the initial date of purchase, with certain exceptions. Prior to June 21, 2021, Class C shares automatically converted to Class A shares after a holding period of ten years from the initial date of purchase, with certain exceptions. The Funds invest primarily in securities of companies whose principal business activities fall within specific industries. Share transactions on the Statement of Changes in Net Assets and Share Transactions note may contain exchanges between affiliated funds.
2. Investments in Fidelity Central Funds.
Funds may 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
Based on its investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the investing fund. These strategies are consistent with the investment objectives of the investing fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the investing fund.
Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio(a) |
Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | Less than .005% |
(a) Expenses expressed as a percentage of average net assets and are as of each underlying Central Fund's most recent annual or semi-annual shareholder report.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which contain the significant accounting policies (including investment valuation policies) of those funds, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission website or upon request.
3. Significant Accounting Policies.
Each Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies. 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. Each Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. The following summarizes the significant accounting policies of each 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 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 – Unadjusted 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, 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. 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, 2022 is included at the end of each Fund's Schedule of Investments.
Foreign Currency. Certain 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 for certain Funds include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable.
Class Allocations and 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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. Expense estimates are accrued in the period to which they relate and adjustments are made when actual amounts are known.
For Communication Services Portfolio, investment income, realized and unrealized capital gains and losses, common expenses, 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. 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.
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, 2022, 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 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, 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), net operating losses, and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows for each Fund:
Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) | |
Automotive Portfolio | $140,056,897 | $51,411,570 | $(7,422,426) | $43,989,144 |
Communication Services Portfolio | 833,076,713 | 326,558,832 | (87,434,268) | 239,124,564 |
Construction and Housing Portfolio | 547,967,790 | 216,795,349 | (44,507,763) | 172,287,586 |
Consumer Discretionary Portfolio | 226,802,009 | 212,542,441 | (10,160,231) | 202,382,210 |
Leisure Portfolio | 498,325,587 | 190,000,198 | (21,902,051) | 168,098,147 |
Retailing Portfolio | 2,290,209,258 | 1,827,041,572 | (166,747,265) | 1,660,294,307 |
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 | |
Automotive Portfolio | $– | $2,062,825 | $43,986,952 |
Communication Services Portfolio | – | – | 239,124,366 |
Construction and Housing Portfolio | – | – | 172,287,586 |
Consumer Discretionary Portfolio | – | 36,763,907 | 202,379,677 |
Leisure Portfolio | 200,995 | 16,313,028 | 168,098,145 |
Retailing Portfolio | – | 73,768,277 | 1,660,294,318 |
Certain of the Funds intend to elect to defer to the next fiscal year capital losses recognized during the period November 1, 2021 to February 28, 2022. Loss deferrals were as follows:
Capital losses | |
Communication Services Portfolio | $(5,076,729) |
Construction and Housing Portfolio | (79,816) |
Consumer Discretionary Portfolio | (9,825,218) |
The tax character of distributions paid was as follows:
February 28, 2022 | |||
Ordinary Income | Long-term Capital Gains | Total | |
Automotive Portfolio | $1,558,029 | $4,579,099 | $6,137,128 |
Communication Services Portfolio | 29,776,343 | 34,129,421 | 63,905,764 |
Construction and Housing Portfolio | 14,753,592 | 25,146,850 | 39,900,442 |
Consumer Discretionary Portfolio | 1,098,748 | 56,820,968 | 57,919,716 |
Leisure Portfolio | 26,867,028 | 113,972,286 | 140,839,314 |
Retailing Portfolio | 157,489,329 | 488,229,086 | 645,718,415 |
February 28, 2021 | |||
Ordinary Income | Long-term Capital Gains | Total | |
Automotive Portfolio | $33,769 | $6,782,711 | $6,816,480 |
Communication Services Portfolio | – | 30,372,833 | 30,372,833 |
Construction and Housing Portfolio | 8,353,411 | 7,498,578 | 15,851,989 |
Consumer Discretionary Portfolio | – | 6,311,869 | 6,311,869 |
Leisure Portfolio | 2,584,978 | 10,382,580 | 12,967,558 |
Retailing Portfolio | – | 251,762,516 | 251,762,516 |
Restricted Securities (including Private Placements). 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 held at period end is included at the end of the Schedule of Investments, if applicable.
Special Purpose Acquisition Companies. Funds may invest in stock, warrants, and other securities of special purpose acquisition companies (SPACs) or similar special purpose entities. A SPAC is a publicly traded company that raises investment capital via an initial public offering (IPO) for the purpose of acquiring the equity securities of one or more existing companies via merger, business combination, acquisition or other similar transactions within a designated time frame.
Private Investment in Public Equity. Funds may acquire equity securities of an issuer through a private investment in a public equity (PIPE) transaction, including through commitments to purchase securities on a when-issued basis. A PIPE typically involves the purchase of securities directly from a publicly traded company in a private placement transaction. Securities purchased through PIPE transactions will be restricted from trading and considered illiquid until a resale registration statement for the shares is filed and declared effective.
At the current and/or prior period end, Automotive Portfolio, Construction and Housing Portfolio and Retailing Portfolio had commitments to purchase when-issued securities through PIPE transactions with SPACs. The commitments are contingent upon the SPACs acquiring the securities of target companies. Unrealized appreciation (depreciation) on any commitments outstanding at period end is separately presented in the Statements of Assets and Liabilities as Unrealized appreciation (depreciation) on unfunded commitments, and any change in unrealized appreciation (depreciation) on unfunded commitments during the period is separately presented in the Statement of Operations, as applicable. The total amount of commitments outstanding at period end is presented in the table below.
Commitment Amount | |
Retailing Portfolio | $10,000,000 |
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, as applicable, are noted in the table below.
Purchases ($) | Sales ($) | |
Automotive Portfolio | 138,517,186 | 177,998,311 |
Communication Services Portfolio | 916,101,611 | 699,449,329 |
Construction and Housing Portfolio | 747,756,596 | 426,309,777 |
Consumer Discretionary Portfolio | 233,328,452 | 406,225,182 |
Leisure Portfolio | 554,505,186 | 609,881,381 |
Retailing Portfolio | 1,432,049,842 | 1,771,063,802 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company 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 monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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% | .22% | .52% |
Communication Services Portfolio | .30% | .22% | .52% |
Construction and Housing Portfolio | .30% | .22% | .53% |
Consumer Discretionary Portfolio | .30% | .22% | .52% |
Leisure Portfolio | .30% | .22% | .52% |
Retailing Portfolio | .30% | .22% | .52% |
Distribution and Service Plan Fees. In accordance with Rule 12b-1 of the 1940 Act, Communication Services Portfolio has adopted separate Distribution and Service Plans for each class of shares. Certain classes pay Fidelity Distributors Company LLC (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 each 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 | |
Communication Services Portfolio | ||||
Class A | -% | .25% | $90,741 | $5,693 |
Class M | .25% | .25% | 37,276 | – |
Class C | .75% | .25% | 96,343 | 35,204 |
$224,360 | $40,897 |
Sales Load. For Communication Services Portfolio, FDC may receive a front-end sales charge of up to 5.75% for selling Class A shares and 3.50% for selling Class M 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 M and Class C redemptions. The deferred sales charges are 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class M shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained by FDC | |
Communication Services Portfolio | |
Class A | $42,753 |
Class M | 3,590 |
Class C(a) | 471 |
$46,814 |
(a) When 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 LLC (FIIOC), an affiliate of the investment adviser, is the transfer, dividend disbursing and shareholder servicing agent for each class (Communication Services Portfolio) or Fund (all other Funds). 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 class or Fund, except for Class Z. FIIOC receives an asset-based fee of Class Z's average net assets. FIIOC pays for typesetting, printing and mailing of shareholder reports, except proxy statements. For the period, transfer agent fees were as follows:
Amount | % of Average Net Assets | |
Automotive Portfolio | $382,872 | .19 |
Communication Services Portfolio | ||
Class A | 75,191 | .21 |
Class M | 14,462 | .19 |
Class C | 19,518 | .20 |
Communication Services | 1,977,883 | .17 |
Class I | 68,504 | .18 |
Class Z | 3,592 | .04 |
2,159,150 | ||
Construction and Housing Portfolio | 1,006,125 | .16 |
Consumer Discretionary Portfolio | 945,887 | .15 |
Leisure Portfolio | 1,115,934 | .16 |
Retailing Portfolio | 6,457,621 | .15 |
Accounting 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. For the period, the fees were equivalent to the following annual rates:
% of Average Net Assets | |
Automotive Portfolio | .04 |
Communication Services Portfolio | .03 |
Construction and Housing Portfolio | .04 |
Consumer Discretionary Portfolio | .04 |
Leisure Portfolio | .04 |
Retailing Portfolio | .02 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 | $2,521 |
Communication Services Portfolio | 13,092 |
Construction and Housing Portfolio | 6,965 |
Consumer Discretionary Portfolio | 2,267 |
Leisure Portfolio | 7,621 |
Retailing Portfolio | 16,450 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), each Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing each Fund to borrow from, or lend money to, other participating affiliated funds. At period end, Automotive Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio and Leisure Portfolio had no interfund loans outstanding. Any open loans, including accrued interest, at period end are presented under the caption "Notes payable to affiliates" in the their Statements of Assets and Liabilities. 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 | |
Automotive Portfolio | Borrower | $13,090,500 | .29% | $422 |
Communication Services Portfolio | Borrower | $6,248,000 | .32% | $219 |
Construction and Housing Portfolio | Borrower | $6,838,000 | .32% | $359 |
Consumer Discretionary Portfolio | Borrower | $7,940,828 | .31% | $1,991 |
Leisure Portfolio | Borrower | $6,704,875 | .30% | $1,360 |
Retailing Portfolio | Borrower | $7,789,932 | .32% | $3,015 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
Automotive Portfolio | 4,328,809 | 7,124,421 | 1,765,952 |
Communication Services Portfolio | 67,144,755 | 49,210,943 | (932,397) |
Construction and Housing Portfolio | 73,347,112 | 17,493,577 | 1,713,742 |
Consumer Discretionary Portfolio | 20,033,505 | 22,829,295 | 2,318,080 |
Leisure Portfolio | 28,080,229 | 20,076,591 | 4,407,441 |
Retailing Portfolio | 105,156,575 | 50,803,094 | 5,605,138 |
Other. During the period, the investment adviser reimbursed the Funds for certain losses as follows:
Amount ($) | |
Consumer Discretionary Portfolio | 78,846 |
Retailing Portfolio | 1,125 |
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 listed below. During the period, there were no borrowings on this line of credit.
Amount | |
Automotive Portfolio | $341 |
Communication Services Portfolio | 2,047 |
Construction and Housing Portfolio | 878 |
Consumer Discretionary Portfolio | 1,074 |
Leisure Portfolio | 1,185 |
Retailing Portfolio | 7,506 |
7. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the 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. Affiliated security lending activity, if any, was as follows:
Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
Automotive Portfolio | $3,568 | $– | $– |
Communication Services Portfolio | $4,092 | $189 | $– |
Construction and Housing Portfolio | $20,742 | $– | $– |
Consumer Discretionary Portfolio | $1,100 | $3 | $– |
Leisure Portfolio | $17,699 | $8,038 | $– |
Retailing Portfolio | $24,429 | $159 | $– |
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. Any open loans, including accrued interest, at period end are presented under the caption "Notes payable" in the Statement of Assets and Liabilities, if applicable. Activity in this program during the period for which loans were outstanding was as follows:
Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
Consumer Discretionary Portfolio | $11,000 | .58% | $– |
Leisure Portfolio | $339,000 | .58% | $22 |
9. Expense Reductions.
Through arrangements with each custodian, credits realized as a result of certain uninvested cash balances were used to reduce each applicable Fund's or class' expenses. All of the applicable expense reductions are noted in the table below.
Custodian credits | |
Construction and Housing Portfolio | $23 |
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses as follows:
Amount | |
Automotive Portfolio | $4,637 |
Construction and Housing Portfolio | 14,836 |
Consumer Discretionary Portfolio | 14,660 |
Leisure Portfolio | 15,871 |
Retailing Portfolio | 100,870 |
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of fund-level operating expenses as follows:
Fund-Level Amount | |
Communication Services Portfolio | $29,719 |
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Communication Services Portfolio | ||
Distributions to shareholders | ||
Class A | $1,776,273 | $635,984 |
Class M | 363,201 | 164,640 |
Class C | 474,822 | 167,834 |
Communication Services | 59,014,431 | 28,584,094 |
Class I | 1,922,707 | 512,611 |
Class Z | 354,330 | 307,670 |
Total | $63,905,764 | $30,372,833 |
11. Share Transactions.
Share transactions for each class were as follows and may contain in-kind transactions, automatic conversions between classes or exchanges between affiliated funds:
Shares | Shares | Dollars | Dollars | |
Year ended February 28, 2022 | Year ended February 28, 2021 | Year ended February 28, 2022 | Year ended February 28, 2021 | |
Communication Services Portfolio | ||||
Class A | ||||
Shares sold | 288,312 | 268,026 | $27,200,334 | $17,593,964 |
Reinvestment of distributions | 19,346 | 9,103 | 1,740,757 | 632,897 |
Shares redeemed | (140,910) | (178,220) | (12,635,364) | (12,053,875) |
Net increase (decrease) | 166,748 | 98,909 | $16,305,727 | $6,172,986 |
Class M | ||||
Shares sold | 38,436 | 60,603 | $3,599,648 | $4,303,282 |
Reinvestment of distributions | 3,956 | 2,265 | 355,421 | 162,557 |
Shares redeemed | (29,716) | (38,319) | (2,591,005) | (2,745,690) |
Net increase (decrease) | 12,676 | 24,549 | $1,364,064 | $1,720,149 |
Class C | ||||
Shares sold | 59,277 | 56,901 | $5,482,069 | $4,065,760 |
Reinvestment of distributions | 5,320 | 2,360 | 471,861 | 167,219 |
Shares redeemed | (27,914) | (12,513) | (2,486,600) | (829,994) |
Net increase (decrease) | 36,683 | 46,748 | $3,467,330 | $3,402,985 |
Communication Services | ||||
Shares sold | 6,404,833 | 2,744,272 | $608,572,415 | $201,655,702 |
Reinvestment of distributions | 621,227 | 412,314 | 56,410,302 | 27,550,747 |
Shares redeemed | (4,677,647) | (2,861,981) | (433,498,431) | (194,981,100) |
Net increase (decrease) | 2,348,413 | 294,605 | $231,484,286 | $34,225,349 |
Class I | ||||
Shares sold | 316,400 | 395,855 | $30,080,975 | $28,329,531 |
Reinvestment of distributions | 19,631 | 6,359 | 1,780,227 | 498,174 |
Shares redeemed | (231,351) | (141,365) | (20,888,532) | (10,652,768) |
Net increase (decrease) | 104,680 | 260,849 | $10,972,670 | $18,174,937 |
Class Z | ||||
Shares sold | 98,916 | 159,779 | $9,255,551 | $11,122,518 |
Reinvestment of distributions | 3,767 | 1,640 | 340,659 | 115,109 |
Shares redeemed | (64,255) | (148,188) | (5,703,077) | (11,892,094) |
Net increase (decrease) | 38,428 | 13,231 | $3,893,133 | $(654,467) |
12. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a fund. The risk of material loss from such claims is considered remote.
13. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Funds' performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and Shareholders of Automotive Portfolio, Communication Services Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio and Retailing Portfolio
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Automotive Portfolio, Communication Services Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Leisure Portfolio and Retailing Portfolio (six of the funds constituting Fidelity Select Portfolios, hereafter collectively referred to as the “Funds”) as of February 28, 2022, the related statements of operations for the year ended February 28, 2022, the statements of changes in net assets for each of the two years in the period ended February 28, 2022, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of February 28, 2022, 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 ended February 28, 2022 and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 28, 2022 by correspondence with the custodian, issuers of privately offered securities 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 opinions.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
April 14, 2022
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
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 317 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 if you’re an individual investing directly with Fidelity, call 1-800-835-5092 if you’re a plan sponsor or participant with Fidelity as your recordkeeper or call 1-877-208-0098 on institutional accounts or if you’re an advisor or invest through one.
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. Robert A. Lawrence is an interested person and currently serves as Acting 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. David M. Thomas serves as Lead Independent Trustee 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 high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the funds' Board. 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 FMR 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 FMR, 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, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. 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+
Bettina Doulton (1964)
Year of Election or Appointment: 2020
Trustee
Ms. Doulton also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Doulton served in a variety of positions at Fidelity Investments, including as a managing director of research (2006-2007), portfolio manager to certain Fidelity® funds (1993-2005), equity analyst and portfolio assistant (1990-1993), and research assistant (1987-1990). Ms. Doulton currently owns and operates Phi Builders + Architects and Cellardoor Winery. Previously, Ms. Doulton served as a member of the Board of Brown Capital Management, LLC (2014-2018).
Robert A. Lawrence (1952)
Year of Election or Appointment: 2020
Trustee
Acting Chairman of the Board of Trustees
Mr. Lawrence also serves as Trustee of other funds. Previously, Mr. Lawrence served as a Member of the Advisory Board of certain funds. Prior to his retirement in 2008, Mr. Lawrence served as Vice President of certain Fidelity® funds (2006-2008), Senior Vice President, Head of High Income Division of Fidelity Management & Research Company (investment adviser firm, 2006-2008), and President of Fidelity Strategic Investments (investment adviser firm, 2002-2005).
* 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 FMR.
+ 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+
Thomas P. Bostick (1956)
Year of Election or Appointment: 2021
Trustee
Lieutenant General Bostick also serves as Trustee of other Fidelity® funds. Prior to his retirement, General Bostick (United States Army, Retired) held a variety of positions within the U.S. Army, including Commanding General and Chief of Engineers, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff and Director of Human Resources, U.S. Army (2009-2012). General Bostick currently serves as a member of the Board and Finance and Governance Committees of CSX Corporation (transportation, 2020-present) and a member of the Board and Corporate Governance and Nominating Committee of Perma-Fix Environmental Services, Inc. (nuclear waste management, 2020-present). General Bostick serves as Chief Executive Officer of Bostick Global Strategies, LLC (consulting, 2016-present) and as a member of the Board of HireVue, Inc. (video interview and assessment, 2020-present). Previously, General Bostick served as a Member of the Advisory Board of certain Fidelity® funds (2021), President, Intrexon Bioengineering (2018-2020) and Chief Operating Officer (2017-2020) and Senior Vice President of the Environment Sector (2016-2017) of Intrexon Corporation (biopharmaceutical company).
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 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 currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York and a member of the Board of The Leadership Academy (previously NYC Leadership Academy) (2012-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Vicki L. Fuller (1957)
Year of Election or Appointment: 2020
Trustee
Ms. Fuller also serves as Trustee of other Fidelity® funds. Previously, Ms. Fuller served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of two Blackstone business development companies (2020-present), as a member of the Board of Treliant, LLC (consulting, 2019-present), as a member of the Advisory Board of Ariel Alternatives, LLC (private equity, 2021-present) and as a member of the Board and Chair of the Audit Committee of Gusto, Inc. (software, 2021-present). In addition, Ms. Fuller currently serves as a member of the Board of Roosevelt University (2019-present) and as a member of the Executive Board of New York University’s Stern School of Business. Ms. Fuller previously served as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-2021).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Trustee
Ms. Kampling also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Finance Committee and Governance, Compensation and Nominating Committee of Xcel Energy Inc. (utilities company, 2020-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee and Chair of the Executive Development and Compensation Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a Member of the Advisory Board of certain Fidelity® funds (2020), a member of the Board, Compensation Committee and Executive Committee and Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-2021), a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Thomas A. Kennedy (1955)
Year of Election or Appointment: 2021
Trustee
Mr. Kennedy also serves as Trustee of other Fidelity® funds. Previously, Mr. Kennedy served as a Member of the Advisory Board of certain Fidelity® funds (2020) and held a variety of positions at Raytheon Company (aerospace and defense, 1983-2020), including Chairman and Chief Executive Officer (2014-2020) and Executive Vice President and Chief Operating Officer (2013-2014). Mr. Kennedy currently serves as Executive Chairman of the Board of Directors of Raytheon Technologies Corporation (aerospace and defense, 2020-present). He is also a member of the Rutgers School of Engineering Industry Advisory Board (2011-present) and a member of the UCLA Engineering Dean’s Executive Board (2016-present).
Oscar Munoz (1959)
Year of Election or Appointment: 2021
Trustee
Mr. Munoz also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Munoz served as Executive Chairman (2020-2021), Chief Executive Officer (2015-2020), President (2015-2016) and a member of the Board (2010-2021) of United Airlines Holdings, Inc. Mr. Munoz currently serves as a member of the Board of CBRE Group, Inc. (commercial real estate, 2020-present), a member of the Board of Univision Communications, Inc. (Hispanic media, 2020-present) and a member of the Advisory Board of Salesforce.com, Inc. (cloud-based software, 2020-present). Previously, Mr. Munoz served as a Member of the Advisory Board of certain Fidelity® funds (2021).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Lead Independent Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as a member of the Board of Fortune Brands Home and Security (home and security products, 2004-present) and as Director (2013-present) and Non-Executive Chairman of the Board (2022-present) of Interpublic Group of Companies, Inc. (marketing communication).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Trustee
Ms. Tomasky also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Executive Committee, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present) and as a member of the Board of its subsidiary company, Public Service Electric and Gas Co. (2021-present). In addition, Ms. Tomasky currently serves as a member (2009-present) and President (2020-present) of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board and Kenyon in the World Committee of Kenyon College (2016-present). Previously, Ms. Tomasky served as a Member of the Advisory Board of certain Fidelity® funds (2020), as a member of the Board of the Columbus Regional Airport Authority (2007-2020), as a member of the Board (2011-2018) and Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee of other Fidelity® funds. Previously, Mr. Wiley served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley also previously served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018), a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018) and a member of the Board of High Point Resources (exploration and production, 2005-2020).
+ 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 (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as an officer of other funds. Mr. Brown serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
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 Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as an officer of other funds. Mr. Davis serves as Assistant Treasurer of FIMM, LLC (2021-present), FMR Capital, Inc. (2017-present), FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); 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).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2017-present). Previously, Ms. Del Prato served as President and Treasurer of The North Carolina Capital Management Trust: Cash Portfolio and Term Portfolio (2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present); Secretary of FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); and Assistant Secretary of FIMM, LLC (2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); 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).
Jason P. Pogorelec (1975)
Year of Election or Appointment: 2020
Chief Compliance Officer
Mr. Pogorelec also serves as Chief Compliance Officer of other funds. Mr. Pogorelec is a senior Vice President of Asset Management Compliance for Fidelity Investments and is an employee of Fidelity Investments (2006-present). Previously, Mr. Pogorelec served as Vice President, Associate General Counsel for Fidelity Investments (2010-2020) and Assistant Secretary of certain Fidelity funds (2015-2020).
Brett Segaloff (1972)
Year of Election or Appointment: 2021
Anti-Money Laundering (AML) Officer
Mr. Segaloff also serves as an AML Officer of other funds and other related entities. He is Director, Anti-Money Laundering (2007-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments (1996-present).
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), 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 Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as an officer of other funds. Mr. Wegmann serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2011-present). Previously, Mr. Wegmann served as Assistant Treasurer of certain Fidelity® funds (2019-2021).
Shareholder Expense Example
As a shareholder, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or redemption proceeds, as applicable and (2) ongoing costs, which generally include 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 a 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, 2021 to February 28, 2022).
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 for a class/Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If any fund is a shareholder of any underlying mutual funds or exchange-traded funds (ETFs) (the Underlying Funds), such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses incurred presented in the table. These fees and expenses are not included in the 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 actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the 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. If any fund is a shareholder of any Underlying Funds, such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses as presented in the table. These fees and expenses are not included in the 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, 2021 | Ending Account Value February 28, 2022 | Expenses Paid During Period-B September 1, 2021 to February 28, 2022 | |
Automotive Portfolio | .80% | |||
Actual | $1,000.00 | $981.70 | $3.93 | |
Hypothetical-C | $1,000.00 | $1,020.83 | $4.01 | |
Communication Services Portfolio | ||||
Class A | 1.03% | |||
Actual | $1,000.00 | $787.50 | $4.56 | |
Hypothetical-C | $1,000.00 | $1,019.69 | $5.16 | |
Class M | 1.26% | |||
Actual | $1,000.00 | $786.50 | $5.58 | |
Hypothetical-C | $1,000.00 | $1,018.55 | $6.31 | |
Class C | 1.77% | |||
Actual | $1,000.00 | $784.60 | $7.83 | |
Hypothetical-C | $1,000.00 | $1,016.02 | $8.85 | |
Communication Services | .74% | |||
Actual | $1,000.00 | $788.50 | $3.28 | |
Hypothetical-C | $1,000.00 | $1,021.12 | $3.71 | |
Class I | .74% | |||
Actual | $1,000.00 | $788.60 | $3.28 | |
Hypothetical-C | $1,000.00 | $1,021.12 | $3.71 | |
Class Z | .61% | |||
Actual | $1,000.00 | $789.10 | $2.71 | |
Hypothetical-C | $1,000.00 | $1,021.77 | $3.06 | |
Construction and Housing Portfolio | .74% | |||
Actual | $1,000.00 | $979.60 | $3.63 | |
Hypothetical-C | $1,000.00 | $1,021.12 | $3.71 | |
Consumer Discretionary Portfolio | .72% | |||
Actual | $1,000.00 | $919.00 | $3.43 | |
Hypothetical-C | $1,000.00 | $1,021.22 | $3.61 | |
Leisure Portfolio | .72% | |||
Actual | $1,000.00 | $1,003.10 | $3.58 | |
Hypothetical-C | $1,000.00 | $1,021.22 | $3.61 | |
Retailing Portfolio | .69% | |||
Actual | $1,000.00 | $873.50 | $3.21 | |
Hypothetical-C | $1,000.00 | $1,021.37 | $3.46 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/ 365 (to reflect the one-half year period). The fees and expenses of any Underlying Funds are not included in each annualized expense ratio.
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 | 04/11/22 | 04/08/22 | $0.0000 | $0.765 |
Communication Services Portfolio | ||||
Class A | 04/11/22 | 04/08/22 | $0.0000 | $0.000 |
Class M | 04/11/22 | 04/08/22 | $0.0000 | $0.000 |
Class C | 04/11/22 | 04/08/22 | $0.0000 | $0.000 |
Communication Services | 04/11/22 | 04/08/22 | $0.0000 | $0.000 |
Class I | 04/11/22 | 04/08/22 | $0.0000 | $0.000 |
Class Z | 04/11/22 | 04/08/22 | $0.0000 | $0.000 |
Construction and Housing Portfolio | 04/11/22 | 04/08/22 | $0.0000 | $0.000 |
Consumer Discretionary Portfolio | 04/11/22 | 04/08/22 | $0.0000 | $5.827 |
Leisure Portfolio | 04/11/22 | 04/08/22 | $0.0060 | $0.424 |
Retailing Portfolio | 04/11/22 | 04/08/22 | $0.0000 | $0.405 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2022, or, if subsequently determined to be different, the net capital gain of such year.
Automotive Portfolio | $9,013,269 |
Communication Services Portfolio | $27,122,173 |
Construction and Housing Portfolio | $14,957,168 |
Consumer Discretionary Portfolio | $77,481,869 |
Leisure Portfolio | $108,791,970 |
Retailing Portfolio | $391,739,194 |
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 M | Class C | Retail | Class I | Class Z | |
Automotive Portfolio | ||||||
April 2021 | – | – | – | 91% | – | – |
December 2021 | – | – | – | 22% | – | – |
Communication Services Portfolio | ||||||
April 2021 | 5% | 6% | 6% | 5% | 5% | 5% |
Construction and Housing Portfolio | ||||||
December 2021 | – | – | – | 32% | – | – |
Consumer Discretionary Portfolio | ||||||
December 2021 | – | – | – | 100% | – | – |
Leisure Portfolio | ||||||
April 2021 | – | – | – | 78% | – | – |
December 2021 | – | – | – | 16% | – | – |
Retailing Portfolio | ||||||
April 2021 | – | – | – | 43% | – | – |
December 2021 | – | – | – | 21% | – | – |
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 M | Class C | Retail | Class I | Class Z | |
Automotive Portfolio | ||||||
April 2021 | – | – | – | 100% | – | – |
December 2021 | – | – | – | 100% | – | – |
Communication Services Portfolio | ||||||
April 2021 | 6% | 6% | 7% | 6% | 6% | 6% |
Construction and Housing Portfolio | ||||||
December 2021 | – | – | – | 37% | – | – |
Consumer Discretionary Portfolio | ||||||
December 2021 | – | – | – | 100% | – | – |
Leisure Portfolio | ||||||
April 2021 | – | – | – | 87% | – | – |
December 2021 | – | – | – | 20% | – | – |
Retailing Portfolio | ||||||
April 2021 | – | – | – | 44% | – | – |
December 2021 | – | – | – | 22% | – | – |
The fund designates the below percentage of the dividends distributed during the fiscal year as a section 199A dividend:
Construction and Housing Portfolio | |
December 2021 | 14% |
Leisure Portfolio | |
April 2021 | 3% |
December 2021 | 1% |
The funds hereby designate the percentages noted below of the short-term capital gain dividends distributed during the fiscal year as qualifying to be taxed as short-term capital gain dividends for nonresident alien shareholders:
Automotive Portfolio | |
December 2021 | 100% |
Communication Services Portfolio | |
April 2021 | 100% |
Construction and Housing Portfolio | |
December 2021 | 100% |
Consumer Discretionary Portfolio | |
December 2021 | 100% |
Leisure Portfolio | |
April 2021 | 100% |
December 2021 | 100% |
Retailing Portfolio | |
April 2021 | 100% |
December 2021 | 100% |
The funds will notify shareholders in January 2023 of amounts for use in preparing 2022 income tax returns.
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Funds have adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage each Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. Each Fund’s Board of Trustees (the Board) has designated each Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2020 through November 30, 2021. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
SELCON-ANN-0422
1.813633.117
Fidelity® Select Portfolios®
Energy Sector
Energy Portfolio
February 28, 2022
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Contents
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. © 2022 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-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT 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.
Note to Shareholders:
Early in 2020, the outbreak and spread of COVID-19 emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread. The pandemic prompted a number of measures to limit the spread of COVID-19, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. To help stem the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
In general, the overall impact of the pandemic lessened in 2021, amid a resilient economy and widespread distribution of three COVID-19 vaccines granted emergency use authorization from the U.S. Food and Drug Administration (FDA) early in the year. Still, the situation remains dynamic, and the extent and duration of its influence on financial markets and the economy is highly uncertain, due in part to a recent spike in cases based on highly contagious variants of the coronavirus.
Extreme events such as the COVID-19 crisis are exogenous shocks that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets. Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we continue to take extra steps to be responsive to customer needs. We encourage you to visit us online, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Energy Portfolio | 58.37% | 2.72% | 1.54% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Energy Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789796987_740.jpg)
Period Ending Values | ||
$11,655 | Energy Portfolio | |
$39,037 | S&P 500® Index |
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Maurice FitzMaurice: For the fiscal year ending February 28, 2022, the fund gained 58.37%, outperforming the 53.87% gain of the MSCI US IMI Energy 25/50 Index, as well as the broad-based S&P 500® index. The primary contributors to performance versus the sector index were security selection and an overweighting in oil & gas exploration & production. Security selection in oil & gas storage & transportation and integrated oil & gas also bolstered the fund's relative result. The biggest individual relative contributor was an overweight position in Devon Energy (+193%). Devon Energy was among our biggest holdings as of February 28. The fund's non-index stake in Canadian National Resources, one of the fund's largest holdings, gained 112%. The fund's non-index stake in Cenovus Energy, also one of our biggest holdings, gained 113%. Conversely, the largest detractor from performance versus the sector index was our stock selection in oil & gas equipment & services. Security selection in independent power producers & energy traders and coal & consumable fuels also hindered the fund's relative result. Our largest individual detractor versus the sector index was an out-of-index stake in National Energy Services Reunited (-33%). Another notable relative detractor was an overweighting in TechnipFMC (-16%). Another notable relative detractor was our lighter-than-index stake in ConocoPhillips (+88%). The company was among the fund's biggest holdings. Notable changes in positioning include increased exposure to the oil & gas exploration & production industry and a lower allocation to oil & gas refining & marketing.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, 2022
% of fund's net assets | |
Exxon Mobil Corp. | 20.9 |
Chevron Corp. | 8.4 |
ConocoPhillips Co. | 5.5 |
Pioneer Natural Resources Co. | 4.4 |
Devon Energy Corp. | 4.4 |
Canadian Natural Resources Ltd. | 4.3 |
Cheniere Energy, Inc. | 4.2 |
Hess Corp. | 4.1 |
Cenovus Energy, Inc. (Canada) | 3.2 |
Occidental Petroleum Corp. | 2.8 |
62.2 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Oil, Gas & Consumable Fuels | 90.3% | |
Energy Equipment & Services | 8.0% | |
Independent Power and Renewable Electricity Producers | 0.8% | |
All Others* | 0.9% |
* Includes short-term investments and net other assets (liabilities).
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
Energy Equipment & Services - 8.0% | |||
Oil & Gas Drilling - 0.3% | |||
Nabors Industries Ltd. (a)(b) | 18,199 | $2,284,702 | |
Nabors Industries Ltd. warrants 6/11/26 (a) | 36,999 | 517,986 | |
Odfjell Drilling Ltd. (a) | 1,596,418 | 4,062,082 | |
Shelf Drilling Ltd. (a)(c) | 1,404,689 | 1,159,211 | |
8,023,981 | |||
Oil & Gas Equipment & Services - 7.7% | |||
Baker Hughes Co. Class A | 1,511,678 | 44,413,100 | |
Cactus, Inc. | 95,486 | 4,837,321 | |
Championx Corp. | 174,848 | 3,743,496 | |
Halliburton Co. | 306,700 | 10,283,651 | |
Nextier Oilfield Solutions, Inc. (a) | 3,213,000 | 25,575,480 | |
Oceaneering International, Inc. (a) | 586,730 | 8,589,727 | |
ProPetro Holding Corp. (a) | 1,439,201 | 18,378,597 | |
Schlumberger Ltd. | 1,087,769 | 42,684,056 | |
Technip Energies NV | 506,934 | 5,750,670 | |
TechnipFMC PLC (a) | 2,982,072 | 20,427,193 | |
184,683,291 | |||
TOTAL ENERGY EQUIPMENT & SERVICES | 192,707,272 | ||
Independent Power and Renewable Electricity Producers - 0.8% | |||
Independent Power Producers & Energy Traders - 0.8% | |||
The AES Corp. | 84,700 | 1,798,181 | |
Vistra Corp. | 847,300 | 19,335,386 | |
21,133,567 | |||
Oil, Gas & Consumable Fuels - 90.3% | |||
Coal & Consumable Fuels - 0.2% | |||
Enviva, Inc. | 58,900 | 4,105,330 | |
Integrated Oil & Gas - 37.9% | |||
Cenovus Energy, Inc.: | |||
warrants (a) | 97,500 | 1,020,825 | |
(Canada) | 4,948,106 | 77,803,355 | |
Chevron Corp. | 1,397,203 | 201,197,232 | |
Exxon Mobil Corp. | 6,400,446 | 501,922,975 | |
Imperial Oil Ltd. | 591,800 | 26,562,132 | |
Occidental Petroleum Corp. | 1,525,315 | 66,702,025 | |
Occidental Petroleum Corp. warrants 8/3/27 (a) | 99,550 | 2,265,758 | |
Suncor Energy, Inc. (b) | 1,104,000 | 33,760,189 | |
911,234,491 | |||
Oil & Gas Exploration & Production - 37.7% | |||
Antero Resources Corp. (a) | 1,437,200 | 32,954,996 | |
APA Corp. | 949,000 | 33,812,870 | |
Callon Petroleum Co. (a)(b) | 129,700 | 7,309,892 | |
Canadian Natural Resources Ltd. | 1,856,100 | 103,692,656 | |
Canadian Natural Resources Ltd. | 25,780 | 1,439,297 | |
Chesapeake Energy Corp. (b) | 139,400 | 10,768,650 | |
Civitas Resources, Inc. (b) | 232,254 | 11,721,859 | |
ConocoPhillips Co. | 1,390,366 | 131,890,119 | |
Coterra Energy, Inc. | 1,464,498 | 34,166,738 | |
Devon Energy Corp. | 1,772,300 | 105,540,465 | |
Diamondback Energy, Inc. | 189,000 | 26,100,900 | |
EOG Resources, Inc. | 504,664 | 57,995,987 | |
Hess Corp. | 986,249 | 99,670,324 | |
Magnolia Oil & Gas Corp. Class A | 560,400 | 12,524,940 | |
National Energy Services Reunited Corp. (a)(b) | 1,774,818 | 15,813,628 | |
Northern Oil & Gas, Inc. | 139,960 | 3,510,197 | |
Ovintiv, Inc. | 566,500 | 25,974,025 | |
PDC Energy, Inc. | 1,022,407 | 65,965,700 | |
Pioneer Natural Resources Co. | 442,466 | 106,014,854 | |
Range Resources Corp. (a) | 454,000 | 10,419,300 | |
SM Energy Co. | 199,300 | 7,077,143 | |
Viper Energy Partners LP | 135,259 | 3,977,967 | |
908,342,507 | |||
Oil & Gas Refining & Marketing - 7.0% | |||
Marathon Petroleum Corp. | 813,892 | 63,377,770 | |
Phillips 66 Co. | 498,373 | 41,982,942 | |
Renewable Energy Group, Inc. (a)(b) | 27,400 | 1,685,100 | |
Valero Energy Corp. | 747,400 | 62,415,374 | |
169,461,186 | |||
Oil & Gas Storage & Transport - 7.5% | |||
Cheniere Energy, Inc. | 764,512 | 101,603,645 | |
Energy Transfer LP | 4,811,000 | 48,783,540 | |
Golar LNG Ltd. (a) | 411,333 | 7,157,194 | |
Targa Resources Corp. | 350,300 | 22,899,111 | |
180,443,490 | |||
TOTAL OIL, GAS & CONSUMABLE FUELS | 2,173,587,004 | ||
TOTAL COMMON STOCKS | |||
(Cost $1,647,712,191) | 2,387,427,843 | ||
Money Market Funds - 1.3% | |||
Fidelity Cash Central Fund 0.07% (d) | 7,527,019 | 7,528,525 | |
Fidelity Securities Lending Cash Central Fund 0.07% (d)(e) | 23,404,142 | 23,406,482 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $30,935,007) | 30,935,007 | ||
TOTAL INVESTMENT IN SECURITIES - 100.4% | |||
(Cost $1,678,647,198) | 2,418,362,850 | ||
NET OTHER ASSETS (LIABILITIES) - (0.4)% | (10,722,119) | ||
NET ASSETS - 100% | $2,407,640,731 |
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 $1,159,211 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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $14,452,970 | $358,839,531 | $365,763,976 | $4,005 | $-- | $-- | $7,528,525 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 559,733 | 321,297,252 | 298,450,503 | 20,950 | -- | -- | 23,406,482 | 0.1% |
Total | $15,012,703 | $680,136,783 | $664,214,479 | $24,955 | $-- | $-- | $30,935,007 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $2,387,427,843 | $2,376,455,880 | $10,971,963 | $-- |
Money Market Funds | 30,935,007 | 30,935,007 | -- | -- |
Total Investments in Securities: | $2,418,362,850 | $2,407,390,887 | $10,971,963 | $-- |
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 | 85.8% |
Canada | 10.1% |
Curacao | 1.8% |
Others (Individually Less Than 1%) | 2.3% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $23,935,336) — See accompanying schedule: Unaffiliated issuers (cost $1,647,712,191) | $2,387,427,843 | |
Fidelity Central Funds (cost $30,935,007) | 30,935,007 | |
Total Investment in Securities (cost $1,678,647,198) | $2,418,362,850 | |
Receivable for fund shares sold | 30,865,530 | |
Dividends receivable | 11,426,510 | |
Distributions receivable from Fidelity Central Funds | 2,109 | |
Prepaid expenses | 7,480 | |
Other receivables | 505,936 | |
Total assets | 2,461,170,415 | |
Liabilities | ||
Payable for investments purchased | $22,671,747 | |
Payable for fund shares redeemed | 5,700,179 | |
Accrued management fee | 965,118 | |
Other affiliated payables | 325,096 | |
Other payables and accrued expenses | 461,669 | |
Collateral on securities loaned | 23,405,875 | |
Total liabilities | 53,529,684 | |
Net Assets | $2,407,640,731 | |
Net Assets consist of: | ||
Paid in capital | $2,938,640,713 | |
Total accumulated earnings (loss) | (530,999,982) | |
Net Assets | $2,407,640,731 | |
Net Asset Value, offering price and redemption price per share ($2,407,640,731 ÷ 53,220,533 shares) | $45.24 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $48,060,784 | |
Income from Fidelity Central Funds (including $20,950 from security lending) | 24,955 | |
Total income | 48,085,739 | |
Expenses | ||
Management fee | $7,144,903 | |
Transfer agent fees | 2,538,314 | |
Accounting fees | 431,542 | |
Custodian fees and expenses | 26,537 | |
Independent trustees' fees and expenses | 4,576 | |
Registration fees | 143,364 | |
Audit | 57,582 | |
Legal | 20,281 | |
Interest | 3,612 | |
Miscellaneous | 7,260 | |
Total expenses before reductions | 10,377,971 | |
Expense reductions | (29,535) | |
Total expenses after reductions | 10,348,436 | |
Net investment income (loss) | 37,737,303 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | (5,904,367) | |
Foreign currency transactions | (31,167) | |
Total net realized gain (loss) | (5,935,534) | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | 661,758,610 | |
Assets and liabilities in foreign currencies | (1,219) | |
Total change in net unrealized appreciation (depreciation) | 661,757,391 | |
Net gain (loss) | 655,821,857 | |
Net increase (decrease) in net assets resulting from operations | $693,559,160 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $37,737,303 | $30,974,157 |
Net realized gain (loss) | (5,935,534) | (142,968,598) |
Change in net unrealized appreciation (depreciation) | 661,757,391 | 269,516,568 |
Net increase (decrease) in net assets resulting from operations | 693,559,160 | 157,522,127 |
Distributions to shareholders | (31,460,812) | (24,866,401) |
Share transactions | ||
Proceeds from sales of shares | 1,435,953,793 | 546,805,883 |
Net asset value of shares issued in exchange for the net assets of the Target Fund(s) (see Merger information note) | 388,960,944 | – |
Reinvestment of distributions | 29,620,722 | 23,686,159 |
Cost of shares redeemed | (1,089,636,722) | (398,816,396) |
Net increase (decrease) in net assets resulting from share transactions | 764,898,737 | 171,675,646 |
Total increase (decrease) in net assets | 1,426,997,085 | 304,331,372 |
Net Assets | ||
Beginning of period | 980,643,646 | 676,312,274 |
End of period | $2,407,640,731 | $980,643,646 |
Other Information | ||
Shares | ||
Sold | 39,603,793 | 25,409,225 |
Issued in exchange for the shares of the Target Fund(s) (see Merger Information note) | 11,161,009 | – |
Issued in reinvestment of distributions | 884,794 | 1,036,348 |
Redeemed | (31,953,761) | (18,168,636) |
Net increase (decrease) | 19,695,835 | 8,276,937 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Energy Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $29.25 | $26.79 | $37.50 | $41.01 | $44.10 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .96 | .99D | .71 | .49 | .75E |
Net realized and unrealized gain (loss) | 15.82 | 2.27 | (10.76) | (3.51) | (3.06) |
Total from investment operations | 16.78 | 3.26 | (10.05) | (3.02) | (2.31) |
Distributions from net investment income | (.79) | (.80) | (.64) | (.48) | (.68) |
Distributions from net realized gain | – | – | (.02) | (.01) | (.10) |
Total distributions | (.79) | (.80) | (.66) | (.49) | (.78) |
Net asset value, end of period | $45.24 | $29.25 | $26.79 | $37.50 | $41.01 |
Total ReturnF | 58.37% | 13.03% | (27.24)% | (7.30)% | (5.27)% |
Ratios to Average Net AssetsC,G,H | |||||
Expenses before reductions | .77% | .85% | .81% | .78% | .79% |
Expenses net of fee waivers, if any | .77% | .85% | .81% | .78% | .79% |
Expenses net of all reductions | .77% | .84% | .80% | .77% | .78% |
Net investment income (loss) | 2.79% | 4.50%D | 2.00% | 1.12% | 1.82%E |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $2,407,641 | $980,644 | $676,312 | $1,152,173 | $1,778,436 |
Portfolio turnover rateI | 56%J | 31% | 79%K | 59%K | 59% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.15 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 3.82%.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.48 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .66%.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
J The portfolio turnover rate does not include the assets acquired in the merger.
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, 2022
1. Organization.
Energy 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.
Funds may 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
Based on its investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the investing fund. These strategies are consistent with the investment objectives of the investing fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the investing fund.
Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio(a) |
Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | Less than .005% |
(a) Expenses expressed as a percentage of average net assets and are as of each underlying Central Fund's most recent annual or semi-annual shareholder report.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which contain the significant accounting policies (including investment valuation policies) of those funds, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies. 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 Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. 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 – Unadjusted 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, 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. 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, 2022, is included at the end of the Fund's Schedule of Investments.
Foreign Currency. Certain 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 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 include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable.
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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. 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 certain Funds, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in affiliated mutual funds, are marked-to-market and remain in a fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees presented below are included in the accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, as applicable.
Energy Portfolio | $373,119 |
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, 2022, 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, capital loss carryforwards and losses deferred due to wash sales.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows:
Gross unrealized appreciation | $741,432,182 |
Gross unrealized depreciation | (19,823,438) |
Net unrealized appreciation (depreciation) | $721,608,744 |
Tax Cost | $1,696,754,106 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $6,158,178 |
Capital loss carryforward | $(1,257,884,224) |
Net unrealized appreciation (depreciation) on securities and other investments | $721,076,553 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. 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 | $(433,155,172) |
Long-term | (824,729,052) |
Total capital loss carryforward | $(1,257,884,224) |
Due to a merger in the period, approximately $392,837,894 of the Fund's realized losses are subject to limitation. Due to this limitation, the Fund will only be permitted to use approximately $2,077,904 of those capital losses per year to offset gains. These realized losses were acquired from Select Natural Gas Portfolio when it merged into the Fund on November 19, 2021.
Due to a merger in the period, approximately $323,278,709 of the Fund's realized losses and a portion of the Fund’s unrealized losses are subject to limitation. Due to this limitation, the Fund will only be permitted to use approximately $3,367,549 of those capital losses per year to offset gains. These realized and unrealized losses were acquired from Select Energy Service Portfolio when it merged into the Fund on November 19, 2021.
The tax character of distributions paid was as follows:
February 28, 2022 | February 28, 2021 | |
Ordinary Income | $31,460,812 | $ 24,866,401 |
Total | $31,460,812 | $ 24,866,401 |
Restricted Securities (including Private Placements). 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 held at period end is included at the end of the Schedule of Investments, if applicable.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, securities acquired in the merger, and in-kind transactions, as applicable, are noted in the table below.
Purchases ($) | Sales ($) | |
Energy Portfolio | 1,136,485,005 | 752,840,145 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company 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 .22% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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 .53% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (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 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. For the period, the fees were equivalent to the following annual rates:
% of Average Net Assets | |
Energy Portfolio | .03 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 | $36,593 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. 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 | $8,871,467 | .32% | $3,503 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
Energy Portfolio | 62,050,778 | 57,255,965 | (1,900,087) |
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 listed below. During the period, there were no borrowings on this line of credit.
Amount | |
Energy Portfolio | $2,092 |
7. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the 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. Affiliated security lending activity, if any, was as follows:
Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
Energy Portfolio | $1,973 | $– | $– |
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. Any open loans, including accrued interest, at period end are presented under the caption "Notes payable" in the Statement of Assets and Liabilities, if applicable. 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 Portfolio | $839,375 | .59% | $109 |
9. Expense Reductions.
During the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses in the amount of $29,535.
10. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a fund. The risk of material loss from such claims is considered remote.
11. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Fund's performance.
12. Merger Information.
On November 19, 2021, the Fund acquired all of the assets and assumed all of the liabilities of each Target Fund listed in the below table pursuant to an Agreement and Plan of Reorganization approved by the Board of Trustees ("The Board"). The securities held by each Target Fund were the primary assets acquired by the Fund. The acquisition was accomplished by an exchange of shares of the Fund for shares then outstanding of each Target Fund at their respective net asset value on the acquisition date. The reorganization provides shareholders of each Target Fund access to a larger portfolio with a similar investment objective and lower projected expenses. For financial reporting purposes, the assets and liabilities of each Target Fund and shares issued by the Fund were recorded at fair value; however, the cost basis of the investments received from each Target Fund were carried forward and will be utilized for purposes of the Fund's ongoing reporting of realized and unrealized gains and losses to more closely align subsequent reporting of realized gains with amounts distributable to shareholders for tax purposes. The reorganization qualified as a tax-free reorganization for federal income tax purposes with no gain or loss recognized to the funds or their shareholders.
Target Fund | Investments $ | Unrealized appreciation (depreciation) $ | Net Assets $ | Shares Exchanged | Shares Exchanged Ratio |
Energy Service Portfolio | 239,225,585 | (29,042,821) | 240,539,236 | 6,902,147 | .5578794835 |
Natural Gas Portfolio | 148,458,051 | 3,907,464 | 148,421,708 | 4,258,862 | .4453142037 |
Surviving Fund | Net Assets $ | Total net assets after the acquisition $ |
Energy Portfolio | 1,269,646,810 | 1,658,607,754 |
Pro forma results of operations of the combined entity for the entire period ended February 28, 2022, as though the acquisition had occurred as of the beginning of the year (rather than on the actual acquisition date), are as follows:
Net investment income (loss) | $41,213,855 |
Total net realized gain (loss) | 31,547,962 |
Total change in net unrealized appreciation (depreciation) | 637,928,213 |
Net increase (decrease) in net assets resulting from operations | $710,690,030 |
Because the combined investment portfolios have been managed as a single portfolio since the acquisitions were completed, it is not practicable to separate the amounts of revenue and earnings of the acquired funds that have been included in the Fund's accompanying Statement of Operations since November 19, 2021.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and Shareholders of Energy Portfolio
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Energy Portfolio (one of the funds constituting Fidelity Select Portfolios, referred to hereafter as the “Fund”) as of February 28, 2022, the related statement of operations for the year ended February 28, 2022, the statement of changes in net assets for each of the two years in the period ended February 28, 2022, including the related notes, and the financial highlights for each of the five years in the period ended February 28, 2022 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of February 28, 2022, 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 ended February 28, 2022 and the financial highlights for each of the five years in the period ended February 28, 2022 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 28, 2022 by correspondence with the custodian 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.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
April 14, 2022
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
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 317 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. Robert A. Lawrence is an interested person and currently serves as Acting 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. David M. Thomas serves as Lead Independent Trustee 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 high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the fund's Board. 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 FMR 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 FMR, 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, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. 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+
Bettina Doulton (1964)
Year of Election or Appointment: 2020
Trustee
Ms. Doulton also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Doulton served in a variety of positions at Fidelity Investments, including as a managing director of research (2006-2007), portfolio manager to certain Fidelity® funds (1993-2005), equity analyst and portfolio assistant (1990-1993), and research assistant (1987-1990). Ms. Doulton currently owns and operates Phi Builders + Architects and Cellardoor Winery. Previously, Ms. Doulton served as a member of the Board of Brown Capital Management, LLC (2014-2018).
Robert A. Lawrence (1952)
Year of Election or Appointment: 2020
Trustee
Acting Chairman of the Board of Trustees
Mr. Lawrence also serves as Trustee of other funds. Previously, Mr. Lawrence served as a Member of the Advisory Board of certain funds. Prior to his retirement in 2008, Mr. Lawrence served as Vice President of certain Fidelity® funds (2006-2008), Senior Vice President, Head of High Income Division of Fidelity Management & Research Company (investment adviser firm, 2006-2008), and President of Fidelity Strategic Investments (investment adviser firm, 2002-2005).
* 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 FMR.
+ 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+
Thomas P. Bostick (1956)
Year of Election or Appointment: 2021
Trustee
Lieutenant General Bostick also serves as Trustee of other Fidelity® funds. Prior to his retirement, General Bostick (United States Army, Retired) held a variety of positions within the U.S. Army, including Commanding General and Chief of Engineers, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff and Director of Human Resources, U.S. Army (2009-2012). General Bostick currently serves as a member of the Board and Finance and Governance Committees of CSX Corporation (transportation, 2020-present) and a member of the Board and Corporate Governance and Nominating Committee of Perma-Fix Environmental Services, Inc. (nuclear waste management, 2020-present). General Bostick serves as Chief Executive Officer of Bostick Global Strategies, LLC (consulting, 2016-present) and as a member of the Board of HireVue, Inc. (video interview and assessment, 2020-present). Previously, General Bostick served as a Member of the Advisory Board of certain Fidelity® funds (2021), President, Intrexon Bioengineering (2018-2020) and Chief Operating Officer (2017-2020) and Senior Vice President of the Environment Sector (2016-2017) of Intrexon Corporation (biopharmaceutical company).
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 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 currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York and a member of the Board of The Leadership Academy (previously NYC Leadership Academy) (2012-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Vicki L. Fuller (1957)
Year of Election or Appointment: 2020
Trustee
Ms. Fuller also serves as Trustee of other Fidelity® funds. Previously, Ms. Fuller served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of two Blackstone business development companies (2020-present), as a member of the Board of Treliant, LLC (consulting, 2019-present), as a member of the Advisory Board of Ariel Alternatives, LLC (private equity, 2021-present) and as a member of the Board and Chair of the Audit Committee of Gusto, Inc. (software, 2021-present). In addition, Ms. Fuller currently serves as a member of the Board of Roosevelt University (2019-present) and as a member of the Executive Board of New York University’s Stern School of Business. Ms. Fuller previously served as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-2021).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Trustee
Ms. Kampling also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Finance Committee and Governance, Compensation and Nominating Committee of Xcel Energy Inc. (utilities company, 2020-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee and Chair of the Executive Development and Compensation Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a Member of the Advisory Board of certain Fidelity® funds (2020), a member of the Board, Compensation Committee and Executive Committee and Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-2021), a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Thomas A. Kennedy (1955)
Year of Election or Appointment: 2021
Trustee
Mr. Kennedy also serves as Trustee of other Fidelity® funds. Previously, Mr. Kennedy served as a Member of the Advisory Board of certain Fidelity® funds (2020) and held a variety of positions at Raytheon Company (aerospace and defense, 1983-2020), including Chairman and Chief Executive Officer (2014-2020) and Executive Vice President and Chief Operating Officer (2013-2014). Mr. Kennedy currently serves as Executive Chairman of the Board of Directors of Raytheon Technologies Corporation (aerospace and defense, 2020-present). He is also a member of the Rutgers School of Engineering Industry Advisory Board (2011-present) and a member of the UCLA Engineering Dean’s Executive Board (2016-present).
Oscar Munoz (1959)
Year of Election or Appointment: 2021
Trustee
Mr. Munoz also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Munoz served as Executive Chairman (2020-2021), Chief Executive Officer (2015-2020), President (2015-2016) and a member of the Board (2010-2021) of United Airlines Holdings, Inc. Mr. Munoz currently serves as a member of the Board of CBRE Group, Inc. (commercial real estate, 2020-present), a member of the Board of Univision Communications, Inc. (Hispanic media, 2020-present) and a member of the Advisory Board of Salesforce.com, Inc. (cloud-based software, 2020-present). Previously, Mr. Munoz served as a Member of the Advisory Board of certain Fidelity® funds (2021).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Lead Independent Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as a member of the Board of Fortune Brands Home and Security (home and security products, 2004-present) and as Director (2013-present) and Non-Executive Chairman of the Board (2022-present) of Interpublic Group of Companies, Inc. (marketing communication).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Trustee
Ms. Tomasky also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Executive Committee, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present) and as a member of the Board of its subsidiary company, Public Service Electric and Gas Co. (2021-present). In addition, Ms. Tomasky currently serves as a member (2009-present) and President (2020-present) of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board and Kenyon in the World Committee of Kenyon College (2016-present). Previously, Ms. Tomasky served as a Member of the Advisory Board of certain Fidelity® funds (2020), as a member of the Board of the Columbus Regional Airport Authority (2007-2020), as a member of the Board (2011-2018) and Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee of other Fidelity® funds. Previously, Mr. Wiley served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley also previously served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018), a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018) and a member of the Board of High Point Resources (exploration and production, 2005-2020).
+ 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 (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as an officer of other funds. Mr. Brown serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
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 Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as an officer of other funds. Mr. Davis serves as Assistant Treasurer of FIMM, LLC (2021-present), FMR Capital, Inc. (2017-present), FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); 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).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2017-present). Previously, Ms. Del Prato served as President and Treasurer of The North Carolina Capital Management Trust: Cash Portfolio and Term Portfolio (2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present); Secretary of FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); and Assistant Secretary of FIMM, LLC (2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); 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).
Jason P. Pogorelec (1975)
Year of Election or Appointment: 2020
Chief Compliance Officer
Mr. Pogorelec also serves as Chief Compliance Officer of other funds. Mr. Pogorelec is a senior Vice President of Asset Management Compliance for Fidelity Investments and is an employee of Fidelity Investments (2006-present). Previously, Mr. Pogorelec served as Vice President, Associate General Counsel for Fidelity Investments (2010-2020) and Assistant Secretary of certain Fidelity funds (2015-2020).
Brett Segaloff (1972)
Year of Election or Appointment: 2021
Anti-Money Laundering (AML) Officer
Mr. Segaloff also serves as an AML Officer of other funds and other related entities. He is Director, Anti-Money Laundering (2007-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments (1996-present).
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), 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 Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as an officer of other funds. Mr. Wegmann serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2011-present). Previously, Mr. Wegmann served as Assistant Treasurer of certain Fidelity® funds (2019-2021).
Shareholder Expense Example
As a shareholder, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or redemption proceeds, as applicable and (2) ongoing costs, which generally include 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 a 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, 2021 to February 28, 2022).
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 for a class/Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If any fund is a shareholder of any underlying mutual funds or exchange-traded funds (ETFs) (the Underlying Funds), such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses incurred presented in the table. These fees and expenses are not included in the 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 actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the 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. If any fund is a shareholder of any Underlying Funds, such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses as presented in the table. These fees and expenses are not included in the 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, 2021 | Ending Account Value February 28, 2022 | Expenses Paid During Period-B September 1, 2021 to February 28, 2022 | |
Energy Portfolio | .75% | |||
Actual | $1,000.00 | $1,522.70 | $4.69 | |
Hypothetical-C | $1,000.00 | $1,021.08 | $3.76 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/ 365 (to reflect the one-half year period). The fees and expenses of any Underlying Funds are not included in each annualized expense ratio.
C 5% return per year before expenses
Distributions (Unaudited)
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
April 2021 | November 2021 | December 2021 | |
Select Energy Portfolio | 61% | 96% | 100% |
Select Energy Service Portfolio | 8% | 61% | |
Select Natural Gas Portfolio | 12% | 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 2021 | November 2021 | December 2021 | |
Select Energy Portfolio | 100% | 100% | 100% |
Select Energy Service Portfolio | 88% | 100% | |
Select Natural Gas Portfolio | 54% | 100% | |
The fund will notify shareholders in January 2023 of amounts for use in preparing 2022 income tax returns.
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Fund has adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage the Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. The Fund’s Board of Trustees (the Board) has designated the Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2020 through November 30, 2021. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
SELNR-ANN-0422
1.813649.117
Fidelity® Select Portfolios®
Financials Sector
Banking Portfolio
Brokerage and Investment Management Portfolio
Financial Services Portfolio
FinTech Portfolio (formerly Consumer Finance Portfolio)
Insurance Portfolio
February 28, 2022
![Fidelity Investments](https://capedge.com/proxy/N-CSR/0001379491-22-001658/fid_sun.jpg)
![Fidelity Investments](https://capedge.com/proxy/N-CSR/0001379491-22-001658/fipro_logo.jpg)
Contents
Banking Portfolio | |
Brokerage and Investment Management Portfolio | |
Financial Services Portfolio | |
FinTech Portfolio | |
Insurance Portfolio | |
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. © 2022 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-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT 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.
Note to Shareholders:
Early in 2020, the outbreak and spread of COVID-19 emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread. The pandemic prompted a number of measures to limit the spread of COVID-19, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. To help stem the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
In general, the overall impact of the pandemic lessened in 2021, amid a resilient economy and widespread distribution of three COVID-19 vaccines granted emergency use authorization from the U.S. Food and Drug Administration (FDA) early in the year. Still, the situation remains dynamic, and the extent and duration of its influence on financial markets and the economy is highly uncertain, due in part to a recent spike in cases based on highly contagious variants of the coronavirus.
Extreme events such as the COVID-19 crisis are exogenous shocks that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets. Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we continue to take extra steps to be responsive to customer needs. We encourage you to visit us online, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Banking Portfolio | 23.37% | 8.89% | 12.87% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Banking Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789798988_740.jpg)
Period Ending Values | ||
$33,565 | Banking Portfolio | |
$39,037 | S&P 500® Index |
Banking Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Matthew Reed: For the fiscal year ending February 28, 2022, the fund gained 23.37%, outperforming the 18.63% advance of the MSCI U.S. IMI Banks 5% Capped Linked Index, as well as the broad-based S&P 500® index. Versus the industry index, security selection was the primary contributor, especially in the regional banks category. Favorable picks among diversified banks and non-index exposure to consumer finance companies also boosted the portfolio's relative result. Not owning JPMorgan Chase, an index component that returned roughly -1%, was the biggest individual relative contributor. Adding further value versus the index was our outsized stake in First Horizon, which gained 50% the past 12 months and was among the fund's biggest holdings. Another key contributor was our out-of-index position in Capital One Financial (+29%). In contrast, the largest detractor from performance versus the industry index was an overweighting in diversified banks, followed by smaller-than-index exposure to regional banks. Not owning Fifth Third Bancorp, an index component that gained 42%, was the largest individual relative detractor. Further pressuring the portfolio’s relative return was an outsized stake in NMI Holdings, which rose 1%, though we added to our position during the period. Also hampering performance was our overweighting in Cadence Bancorp, which advanced 6% and was no longer held at period end. Notable changes in positioning the past year include increased exposure to thrifts & mortgage finance stocks.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.
Banking Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
Wells Fargo & Co. | 6.1 |
U.S. Bancorp | 5.7 |
Truist Financial Corp. | 5.5 |
Bank of America Corp. | 5.3 |
Citigroup, Inc. | 4.6 |
M&T Bank Corp. | 4.4 |
Huntington Bancshares, Inc. | 3.8 |
First Horizon National Corp. | 3.5 |
PNC Financial Services Group, Inc. | 2.8 |
East West Bancorp, Inc. | 2.7 |
44.4 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Banks | 84.9% | |
Thrifts & Mortgage Finance | 8.3% | |
Capital Markets | 3.8% | |
Consumer Finance | 2.1% | |
All Others* | 0.9% |
* Includes short-term investments and net other assets (liabilities).
Banking Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
Banks - 84.9% | |||
Diversified Banks - 21.8% | |||
Bank of America Corp. | 863,376 | $38,161,219 | |
Citigroup, Inc. | 553,100 | 32,760,113 | |
Piraeus Financial Holdings SA (a) | 330,200 | 522,955 | |
U.S. Bancorp | 720,200 | 40,720,108 | |
Wells Fargo & Co. | 821,992 | 43,869,714 | |
156,034,109 | |||
Regional Banks - 63.1% | |||
1st Source Corp. | 158,981 | 7,677,192 | |
American National Bankshares, Inc. | 178,986 | 6,908,860 | |
Ameris Bancorp | 83,960 | 4,156,020 | |
Associated Banc-Corp. (b) | 651,600 | 15,892,524 | |
Bank OZK (b) | 302,100 | 14,204,742 | |
BOK Financial Corp. (b) | 150,600 | 15,466,620 | |
Cadence Bank (b) | 444,439 | 14,053,161 | |
Camden National Corp. | 9,532 | 453,247 | |
Comerica, Inc. | 127,100 | 12,136,779 | |
Community Trust Bancorp, Inc. | 170,476 | 7,207,725 | |
ConnectOne Bancorp, Inc. | 214,400 | 7,075,200 | |
East West Bancorp, Inc. | 222,200 | 19,455,832 | |
Eastern Bankshares, Inc. | 154,700 | 3,381,742 | |
First Foundation, Inc. | 33,082 | 882,297 | |
First Horizon National Corp. | 1,058,600 | 24,855,928 | |
First Interstate Bancsystem, Inc. (b) | 430,834 | 17,491,860 | |
Heartland Financial U.S.A., Inc. | 294,500 | 14,613,090 | |
Huntington Bancshares, Inc. | 1,768,800 | 27,451,776 | |
Independent Bank Group, Inc. (b) | 130,700 | 10,083,505 | |
Lakeland Financial Corp. | 51,900 | 4,162,899 | |
M&T Bank Corp. | 174,300 | 31,762,689 | |
Old National Bancorp, Indiana | 283,354 | 5,179,711 | |
PacWest Bancorp | 360,636 | 17,822,631 | |
Peoples United Financial, Inc. | 512,600 | 10,805,608 | |
PNC Financial Services Group, Inc. | 99,600 | 19,845,300 | |
Popular, Inc. | 178,700 | 16,413,595 | |
Preferred Bank, Los Angeles | 142,595 | 11,190,856 | |
Sierra Bancorp | 176,100 | 4,726,524 | |
Signature Bank | 41,190 | 14,206,019 | |
Trico Bancshares | 106,087 | 4,604,176 | |
Truist Financial Corp. | 632,300 | 39,341,706 | |
UMB Financial Corp. | 72,166 | 7,350,829 | |
Univest Corp. of Pennsylvania | 286,000 | 8,288,280 | |
WesBanco, Inc. | 205,600 | 7,512,624 | |
Wintrust Financial Corp. | 150,200 | 14,923,872 | |
Zions Bancorp NA | 157,850 | 11,189,987 | |
452,775,406 | |||
TOTAL BANKS | 608,809,515 | ||
Capital Markets - 3.8% | |||
Asset Management & Custody Banks - 3.8% | |||
Bank of New York Mellon Corp. | 223,200 | 11,863,080 | |
State Street Corp. | 179,400 | 15,308,202 | |
27,171,282 | |||
Consumer Finance - 2.1% | |||
Consumer Finance - 2.1% | |||
Capital One Financial Corp. | 66,700 | 10,223,109 | |
OneMain Holdings, Inc. | 90,800 | 4,628,984 | |
14,852,093 | |||
Diversified Financial Services - 0.0% | |||
Other Diversified Financial Services - 0.0% | |||
Phoenix Vega Mezz PLC (a) | 330,200 | 20,917 | |
Thrifts & Mortgage Finance - 8.3% | |||
Thrifts & Mortgage Finance - 8.3% | |||
Essent Group Ltd. | 315,529 | 13,940,071 | |
MGIC Investment Corp. | 919,100 | 13,951,938 | |
NMI Holdings, Inc. (a) | 608,902 | 14,089,992 | |
Radian Group, Inc. | 334,236 | 7,988,240 | |
Southern Missouri Bancorp, Inc. | 26,700 | 1,430,586 | |
Walker & Dunlop, Inc. | 61,100 | 8,453,185 | |
59,854,012 | |||
TOTAL COMMON STOCKS | |||
(Cost $519,975,076) | 710,707,819 | ||
Money Market Funds - 5.6% | |||
Fidelity Cash Central Fund 0.07% (c) | 70,770 | 70,784 | |
Fidelity Securities Lending Cash Central Fund 0.07% (c)(d) | 39,874,138 | 39,878,125 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $39,948,909) | 39,948,909 | ||
TOTAL INVESTMENT IN SECURITIES - 104.7% | |||
(Cost $559,923,985) | 750,656,728 | ||
NET OTHER ASSETS (LIABILITIES) - (4.7)% | (33,823,079) | ||
NET ASSETS - 100% | $716,833,649 |
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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $6,125,655 | $173,336,014 | $179,390,885 | $2,340 | $-- | $-- | $70,784 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | -- | 143,648,824 | 103,770,699 | 5,746 | -- | -- | 39,878,125 | 0.1% |
Total | $6,125,655 | $316,984,838 | $283,161,584 | $8,086 | $-- | $-- | $39,948,909 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $710,707,819 | $710,163,947 | $543,872 | $-- |
Money Market Funds | 39,948,909 | 39,948,909 | -- | -- |
Total Investments in Securities: | $750,656,728 | $750,112,856 | $543,872 | $-- |
See accompanying notes which are an integral part of the financial statements.
Banking Portfolio
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $38,864,920) — See accompanying schedule: Unaffiliated issuers (cost $519,975,076) | $710,707,819 | |
Fidelity Central Funds (cost $39,948,909) | 39,948,909 | |
Total Investment in Securities (cost $559,923,985) | $750,656,728 | |
Receivable for investments sold | 6,204,958 | |
Receivable for fund shares sold | 1,945,362 | |
Dividends receivable | 1,053,291 | |
Distributions receivable from Fidelity Central Funds | 1,976 | |
Prepaid expenses | 3,563 | |
Other receivables | 3,195 | |
Total assets | 759,869,073 | |
Liabilities | ||
Payable for fund shares redeemed | 2,703,201 | |
Accrued management fee | 316,129 | |
Other affiliated payables | 104,790 | |
Other payables and accrued expenses | 33,179 | |
Collateral on securities loaned | 39,878,125 | |
Total liabilities | 43,035,424 | |
Net Assets | $716,833,649 | |
Net Assets consist of: | ||
Paid in capital | $515,684,002 | |
Total accumulated earnings (loss) | 201,149,647 | |
Net Assets | $716,833,649 | |
Net Asset Value, offering price and redemption price per share ($716,833,649 ÷ 22,854,102 shares) | $31.37 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $17,365,212 | |
Income from Fidelity Central Funds (including $5,746 from security lending) | 8,086 | |
Total income | 17,373,298 | |
Expenses | ||
Management fee | $3,429,995 | |
Transfer agent fees | 985,578 | |
Accounting fees | 236,769 | |
Custodian fees and expenses | 8,672 | |
Independent trustees' fees and expenses | 2,254 | |
Registration fees | 79,340 | |
Audit | 42,978 | |
Legal | 1,587 | |
Interest | 446 | |
Miscellaneous | 3,370 | |
Total expenses before reductions | 4,790,989 | |
Expense reductions | (14,061) | |
Total expenses after reductions | 4,776,928 | |
Net investment income (loss) | 12,596,370 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 29,218,390 | |
Foreign currency transactions | 469 | |
Total net realized gain (loss) | 29,218,859 | |
Change in net unrealized appreciation (depreciation) on investment securities | 75,273,957 | |
Net gain (loss) | 104,492,816 | |
Net increase (decrease) in net assets resulting from operations | $117,089,186 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $12,596,370 | $9,519,334 |
Net realized gain (loss) | 29,218,859 | (3,835,314) |
Change in net unrealized appreciation (depreciation) | 75,273,957 | 100,101,655 |
Net increase (decrease) in net assets resulting from operations | 117,089,186 | 105,785,675 |
Distributions to shareholders | (20,298,948) | (30,620,603) |
Share transactions | ||
Proceeds from sales of shares | 519,785,682 | 280,772,770 |
Reinvestment of distributions | 19,052,468 | 29,138,501 |
Cost of shares redeemed | (456,654,461) | (208,912,791) |
Net increase (decrease) in net assets resulting from share transactions | 82,183,689 | 100,998,480 |
Total increase (decrease) in net assets | 178,973,927 | 176,163,552 |
Net Assets | ||
Beginning of period | 537,859,722 | 361,696,170 |
End of period | $716,833,649 | $537,859,722 |
Other Information | ||
Shares | ||
Sold | 17,252,319 | 14,272,458 |
Issued in reinvestment of distributions | 659,756 | 1,749,438 |
Redeemed | (15,503,674) | (11,050,997) |
Net increase (decrease) | 2,408,401 | 4,970,899 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Banking Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $26.31 | $23.37 | $26.42 | $36.82 | $33.63 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .58 | .54 | .58 | .49 | .42 |
Net realized and unrealized gain (loss) | 5.48 | 4.32 | (1.96) | (3.62) | 3.68 |
Total from investment operations | 6.06 | 4.86 | (1.38) | (3.13) | 4.10 |
Distributions from net investment income | (.54) | (.55) | (.53) | (.54) | (.33) |
Distributions from net realized gain | (.46) | (1.37) | (1.14) | (6.73) | (.58) |
Total distributions | (1.00) | (1.92) | (1.67) | (7.27) | (.91) |
Redemption fees added to paid in capitalB | – | – | – | – | –D |
Net asset value, end of period | $31.37 | $26.31 | $23.37 | $26.42 | $36.82 |
Total ReturnE | 23.37% | 25.90% | (6.05)% | (6.57)% | 12.31% |
Ratios to Average Net AssetsC,F,G | |||||
Expenses before reductions | .73% | .79% | .77% | .77% | .77% |
Expenses net of fee waivers, if any | .73% | .79% | .77% | .77% | .77% |
Expenses net of all reductions | .73% | .79% | .77% | .76% | .77% |
Net investment income (loss) | 1.93% | 2.84% | 2.21% | 1.54% | 1.26% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $716,834 | $537,860 | $361,696 | $514,650 | $830,245 |
Portfolio turnover rateH | 34% | 32% | 31% | 44% | 35% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
H Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Brokerage and Investment Management Portfolio | 21.70% | 16.85% | 14.14% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Brokerage and Investment Management Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789797596_740.jpg)
Period Ending Values | ||
$37,542 | Brokerage and Investment Management Portfolio | |
$39,037 | S&P 500® Index |
Brokerage and Investment Management Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Charles Ackerman: For the fiscal year ending February 28, 2022, the fund gained 21.70%, outperforming the 21.20% gain of the MSCI U.S. IMI Capital Markets 5% Capped Linked Index, as well as the broad-based S&P 500® index. Versus the industry index, security selection was the primary contributor, especially in the asset management & custody banks group. Security selection in investment banking & brokerage and other diversified financial services also helped. The biggest individual relative contributor was an overweight position in Ares Management (+62%) and we added to our stake in this company. Also adding value was our outsized stake in LPL Financial Holdings, which gained 38%. LPL Financial Holdings was among our biggest holdings. Another notable relative contributor was an overweighting in Ameriprise Financial (+38%), which was one of the fund's largest holdings. Conversely, the primary detractor from performance versus the industry index was an underweighting in asset management & custody banks. Stock selection in data processing & outsourced services and an overweighting in investment banking & brokerage also hindered the fund's relative performance. The biggest individual relative detractor was an underweight position in Blackstone (+90%). This period we increased our stake. The fund's stake in PayPal, a non-index position we established this period, returned -61%. Avoiding Houlihan Lokey, an index component that gained about 65%, also hurt relative performance. Notable changes in positioning include increased exposure to the asset management & custody banks subindustry and a lower allocation to investment banking & brokerage.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.
Brokerage and Investment Management Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
LPL Financial | 5.7 |
Intercontinental Exchange, Inc. | 5.5 |
S&P Global, Inc. | 5.3 |
Ameriprise Financial, Inc. | 5.2 |
BlackRock, Inc. Class A | 5.1 |
Charles Schwab Corp. | 5.1 |
Morgan Stanley | 5.0 |
Bank of New York Mellon Corp. | 4.6 |
CME Group, Inc. | 4.0 |
KKR & Co. LP | 3.9 |
49.4 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Capital Markets | 96.0% | |
Diversified Financial Services | 2.5% | |
Banks | 0.7% | |
IT Services | 0.3% | |
All Others* | 0.5% |
* Includes short-term investments and net other assets (liabilities).
Brokerage and Investment Management Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 99.5% | |||
Shares | Value | ||
Banks - 0.7% | |||
Diversified Banks - 0.7% | |||
Wells Fargo & Co. | 158,600 | $8,464,482 | |
Capital Markets - 96.0% | |||
Asset Management & Custody Banks - 42.2% | |||
Affiliated Managers Group, Inc. | 53,000 | 7,333,080 | |
AllianceBernstein Holding LP | 54,200 | 2,430,328 | |
Ameriprise Financial, Inc. | 209,200 | 62,716,068 | |
Ares Management Corp. | 516,400 | 41,874,876 | |
Artisan Partners Asset Management, Inc. (a) | 134,600 | 5,129,606 | |
Bank of New York Mellon Corp. | 1,058,200 | 56,243,330 | |
BlackRock, Inc. Class A | 83,400 | 62,040,426 | |
Blackstone, Inc. | 295,200 | 37,629,144 | |
Blucora, Inc. (b) | 25,600 | 509,440 | |
Blue Owl Capital, Inc. Class A (a) | 855,400 | 10,692,500 | |
Bridge Investment Group Holdings, Inc. | 126,700 | 2,646,763 | |
Carlyle Group LP (a) | 454,000 | 21,278,980 | |
Cohen & Steers, Inc. (a) | 12,428 | 1,009,899 | |
Federated Hermes, Inc. | 15,400 | 503,118 | |
Focus Financial Partners, Inc. Class A (b) | 12,400 | 620,496 | |
Franklin Resources, Inc. | 446,000 | 13,259,580 | |
Invesco Ltd. | 506,300 | 10,753,812 | |
Janus Henderson Group PLC | 195,200 | 6,552,864 | |
KKR & Co. LP | 780,700 | 46,935,684 | |
Northern Trust Corp. | 165,000 | 18,793,500 | |
Owl Rock Capital Corp. | 67,488 | 1,015,694 | |
P10, Inc. (b) | 219,900 | 2,735,556 | |
Patria Investments Ltd. | 577,272 | 9,582,715 | |
Petershill Partners PLC (c) | 1,333,500 | 3,779,854 | |
SEI Investments Co. | 15,300 | 896,274 | |
State Street Corp. | 435,500 | 37,161,215 | |
T. Rowe Price Group, Inc. | 214,300 | 30,979,208 | |
TPG, Inc. | 103,000 | 3,166,220 | |
Virtus Investment Partners, Inc. | 53,100 | 12,776,922 | |
511,047,152 | |||
Financial Exchanges & Data - 28.1% | |||
Cboe Global Markets, Inc. | 129,238 | 15,158,325 | |
CME Group, Inc. | 205,900 | 48,701,527 | |
Coinbase Global, Inc. (a)(b) | 27,700 | 5,284,329 | |
Intercontinental Exchange, Inc. | 516,000 | 66,109,920 | |
MarketAxess Holdings, Inc. | 32,800 | 12,510,904 | |
Moody's Corp. | 102,500 | 33,008,075 | |
MSCI, Inc. | 79,100 | 39,683,679 | |
NASDAQ, Inc. | 225,400 | 38,577,210 | |
Open Lending Corp. (b) | 306,900 | 6,392,727 | |
S&P Global, Inc. | 169,100 | 63,530,870 | |
Tradeweb Markets, Inc. Class A | 127,200 | 10,745,856 | |
339,703,422 | |||
Investment Banking & Brokerage - 25.7% | |||
BGC Partners, Inc. Class A | 523,800 | 2,399,004 | |
Charles Schwab Corp. | 728,761 | 61,551,154 | |
Goldman Sachs Group, Inc. | 117,300 | 40,033,317 | |
Interactive Brokers Group, Inc. (a) | 136,100 | 9,007,098 | |
LPL Financial | 379,000 | 68,580,050 | |
Moelis & Co. Class A | 131,500 | 6,339,615 | |
Morgan Stanley | 662,716 | 60,134,850 | |
Piper Jaffray Companies (a) | 4,000 | 592,040 | |
PJT Partners, Inc. (a) | 199,912 | 12,758,384 | |
Raymond James Financial, Inc. | 302,500 | 33,169,125 | |
Robinhood Markets, Inc. (a)(b) | 210,400 | 2,526,904 | |
Virtu Financial, Inc. Class A | 397,300 | 13,937,284 | |
311,028,825 | |||
TOTAL CAPITAL MARKETS | 1,161,779,399 | ||
Diversified Financial Services - 2.5% | |||
Other Diversified Financial Services - 2.5% | |||
Apollo Global Management, Inc. | 463,500 | 30,248,010 | |
IT Services - 0.3% | |||
Data Processing & Outsourced Services - 0.3% | |||
PayPal Holdings, Inc. (b) | 31,600 | 3,536,988 | |
TOTAL COMMON STOCKS | |||
(Cost $982,893,699) | 1,204,028,879 | ||
Money Market Funds - 4.7% | |||
Fidelity Cash Central Fund 0.07% (d) | 8,616,220 | 8,617,943 | |
Fidelity Securities Lending Cash Central Fund 0.07% (d)(e) | 47,538,146 | 47,542,900 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $56,160,843) | 56,160,843 | ||
TOTAL INVESTMENT IN SECURITIES - 104.2% | |||
(Cost $1,039,054,542) | 1,260,189,722 | ||
NET OTHER ASSETS (LIABILITIES) - (4.2)% | (50,467,914) | ||
NET ASSETS - 100% | $1,209,721,808 |
Legend
(a) Security or a portion of the security is on loan at period end.
(b) Non-income producing
(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 $3,779,854 or 0.3% 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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $10,744,136 | $336,125,720 | $338,251,913 | $18,050 | $-- | $-- | $8,617,943 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | -- | 237,945,791 | 190,402,891 | 61,496 | -- | -- | 47,542,900 | 0.1% |
Total | $10,744,136 | $574,071,511 | $528,654,804 | $79,546 | $-- | $-- | $56,160,843 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $1,204,028,879 | $1,200,249,025 | $3,779,854 | $-- |
Money Market Funds | 56,160,843 | 56,160,843 | -- | -- |
Total Investments in Securities: | $1,260,189,722 | $1,256,409,868 | $3,779,854 | $-- |
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, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $46,253,078) — See accompanying schedule: Unaffiliated issuers (cost $982,893,699) | $1,204,028,879 | |
Fidelity Central Funds (cost $56,160,843) | 56,160,843 | |
Total Investment in Securities (cost $1,039,054,542) | $1,260,189,722 | |
Receivable for fund shares sold | 2,106,487 | |
Dividends receivable | 874,512 | |
Distributions receivable from Fidelity Central Funds | 3,025 | |
Prepaid expenses | 2,096 | |
Other receivables | 63,887 | |
Total assets | 1,263,239,729 | |
Liabilities | ||
Payable for investments purchased | $2,498,226 | |
Payable for fund shares redeemed | 2,638,583 | |
Accrued management fee | 550,279 | |
Other affiliated payables | 190,306 | |
Other payables and accrued expenses | 97,627 | |
Collateral on securities loaned | 47,542,900 | |
Total liabilities | 53,517,921 | |
Net Assets | $1,209,721,808 | |
Net Assets consist of: | ||
Paid in capital | $983,754,632 | |
Total accumulated earnings (loss) | 225,967,176 | |
Net Assets | $1,209,721,808 | |
Net Asset Value, offering price and redemption price per share ($1,209,721,808 ÷ 9,997,121 shares) | $121.01 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $14,348,845 | |
Income from Fidelity Central Funds (including $61,496 from security lending) | 79,546 | |
Total income | 14,428,391 | |
Expenses | ||
Management fee | $4,232,052 | |
Transfer agent fees | 1,239,230 | |
Accounting fees | 278,531 | |
Custodian fees and expenses | 14,666 | |
Independent trustees' fees and expenses | 2,494 | |
Registration fees | 140,471 | |
Audit | 39,632 | |
Legal | 373 | |
Miscellaneous | 2,759 | |
Total expenses before reductions | 5,950,208 | |
Expense reductions | (19,227) | |
Total expenses after reductions | 5,930,981 | |
Net investment income (loss) | 8,497,410 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 5,617,448 | |
Foreign currency transactions | (1,956) | |
Total net realized gain (loss) | 5,615,492 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | 42,393,530 | |
Assets and liabilities in foreign currencies | (2,060) | |
Total change in net unrealized appreciation (depreciation) | 42,391,470 | |
Net gain (loss) | 48,006,962 | |
Net increase (decrease) in net assets resulting from operations | $56,504,372 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $8,497,410 | $3,819,295 |
Net realized gain (loss) | 5,615,492 | 7,728,775 |
Change in net unrealized appreciation (depreciation) | 42,391,470 | 105,207,119 |
Net increase (decrease) in net assets resulting from operations | 56,504,372 | 116,755,189 |
Distributions to shareholders | (11,958,952) | (11,912,054) |
Share transactions | ||
Proceeds from sales of shares | 1,076,173,907 | 84,488,611 |
Reinvestment of distributions | 11,131,114 | 11,152,814 |
Cost of shares redeemed | (351,448,797) | (80,252,501) |
Net increase (decrease) in net assets resulting from share transactions | 735,856,224 | 15,388,924 |
Total increase (decrease) in net assets | 780,401,644 | 120,232,059 |
Net Assets | ||
Beginning of period | 429,320,164 | 309,088,105 |
End of period | $1,209,721,808 | $429,320,164 |
Other Information | ||
Shares | ||
Sold | 8,446,490 | 981,489 |
Issued in reinvestment of distributions | 92,249 | 139,657 |
Redeemed | (2,792,832) | (991,927) |
Net increase (decrease) | 5,745,907 | 129,219 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Brokerage and Investment Management Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $100.99 | $74.99 | $71.71 | $84.47 | $71.13 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | 1.31 | .93 | 1.01 | .77 | 1.15 |
Net realized and unrealized gain (loss) | 20.54 | 28.01 | 5.70 | (7.60) | 17.88 |
Total from investment operations | 21.85 | 28.94 | 6.71 | (6.83) | 19.03 |
Distributions from net investment income | (.83) | (1.06) | (.98) | (.96) | (.82) |
Distributions from net realized gain | (1.01) | (1.88) | (2.45) | (4.96) | (4.87) |
Total distributions | (1.83)D | (2.94) | (3.43) | (5.93)D | (5.69) |
Redemption fees added to paid in capitalB | – | – | – | – | –E |
Net asset value, end of period | $121.01 | $100.99 | $74.99 | $71.71 | $84.47 |
Total ReturnF | 21.70% | 39.69% | 9.28% | (8.04)% | 27.51% |
Ratios to Average Net AssetsC,G,H | |||||
Expenses before reductions | .74% | .76% | .77% | .78% | .79% |
Expenses net of fee waivers, if any | .74% | .76% | .77% | .77% | .79% |
Expenses net of all reductions | .74% | .76% | .77% | .77% | .78% |
Net investment income (loss) | 1.06% | 1.14% | 1.33% | 1.01% | 1.49% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $1,209,722 | $429,320 | $309,088 | $327,128 | $461,981 |
Portfolio turnover rateI | 3% | 11% | 9% | 30% | 75% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Financial Services Portfolio | 22.47% | 12.36% | 13.11% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Financial Services Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789797422_740.jpg)
Period Ending Values | ||
$34,264 | Financial Services Portfolio | |
$39,037 | S&P 500® Index |
Financial Services Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Matthew Reed: For the fiscal year ending February 28, 2022, the fund gained 22.47%, outperforming the 21.91% advance of the MSCI U.S. IMI Financials 5% Capped Linked Index, as well as the broad-based S&P 500® index. Stock picks in the diversified banks and regional banks categories contributed meaningfully to performance versus the sector index. An underweighting in financial exchanges & data stocks also helped. Not owning JPMorgan Chase, an index component that returned roughly -1%, was the biggest individual relative contributor. Also bolstering performance was our overweighting in Wells Fargo, which rose 50% the past 12 months and was the portfolio's largest holding. Another key relative contributor was an outsized stake in M&T Bank (+24%), where we increased our exposure this period. In contrast, security selection and an underweighting in multi-sector holdings jointly detracted the most from performance versus the sector index. Out-of-index picks among data processing & outsourced services firms and stock selection in life & health insurance providers also hindered the fund's relative return. Avoiding the shares of Blackstone, an index component that advanced about 90%, was the biggest individual relative detractor. Also pressuring performance was our oversized exposure to Cannae Holdings, which returned about -28%. Not owning Berkshire Hathaway, an index component that gained roughly 34%, also hindered the portfolio’s relative result this past year. Notable changes in positioning during the period include increased exposure to thrifts & mortgage finance companies and a lower allocation to consumer finance stocks.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.
Financial Services Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
Wells Fargo & Co. | 6.6 |
Bank of America Corp. | 4.0 |
Morgan Stanley | 3.6 |
Citigroup, Inc. | 3.6 |
The Travelers Companies, Inc. | 3.5 |
M&T Bank Corp. | 3.4 |
Capital One Financial Corp. | 3.3 |
American Express Co. | 3.2 |
State Street Corp. | 2.9 |
U.S. Bancorp | 2.5 |
36.6 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Banks | 36.8% | |
Insurance | 22.9% | |
Capital Markets | 18.4% | |
Consumer Finance | 7.5% | |
Thrifts & Mortgage Finance | 5.5% | |
All Others* | 8.9% |
* Includes short-term investments and net other assets (liabilities).
Financial Services Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 99.4% | |||
Shares | Value | ||
Banks - 36.8% | |||
Diversified Banks - 16.8% | |||
Bank of America Corp. | 748,900 | $33,101,380 | |
Citigroup, Inc. | 497,200 | 29,449,156 | |
Piraeus Financial Holdings SA (a) | 380,900 | 603,252 | |
U.S. Bancorp | 362,100 | 20,473,134 | |
Wells Fargo & Co. | 1,009,090 | 53,855,132 | |
137,482,054 | |||
Regional Banks - 20.0% | |||
Ameris Bancorp (b) | 65,300 | 3,232,350 | |
Associated Banc-Corp. (b) | 253,600 | 6,185,304 | |
Bank OZK | 150,000 | 7,053,000 | |
BOK Financial Corp. | 46,500 | 4,775,550 | |
Cadence Bank (b) | 188,830 | 5,970,805 | |
East West Bancorp, Inc. | 97,600 | 8,545,856 | |
First Horizon National Corp. | 498,300 | 11,700,084 | |
First Interstate Bancsystem, Inc. | 164,121 | 6,663,313 | |
Heartland Financial U.S.A., Inc. | 84,500 | 4,192,890 | |
Huntington Bancshares, Inc. | 1,089,900 | 16,915,248 | |
M&T Bank Corp. | 154,600 | 28,172,758 | |
PacWest Bancorp | 127,600 | 6,305,992 | |
Peoples United Financial, Inc. | 176,800 | 3,726,944 | |
Popular, Inc. | 87,800 | 8,064,430 | |
Signature Bank | 32,800 | 11,312,392 | |
Truist Financial Corp. | 307,700 | 19,145,094 | |
WesBanco, Inc. | 95,300 | 3,482,262 | |
Wintrust Financial Corp. | 91,100 | 9,051,696 | |
164,495,968 | |||
TOTAL BANKS | 301,978,022 | ||
Capital Markets - 18.4% | |||
Asset Management & Custody Banks - 9.5% | |||
Affiliated Managers Group, Inc. | 29,500 | 4,081,620 | |
AllianceBernstein Holding LP | 59,873 | 2,684,705 | |
Bank of New York Mellon Corp. | 339,300 | 18,033,795 | |
Brookfield Asset Management, Inc. Class A | 183,000 | 9,999,120 | |
Carlyle Group LP (b) | 155,100 | 7,269,537 | |
Northern Trust Corp. | 46,800 | 5,330,520 | |
Patria Investments Ltd. (b) | 391,600 | 6,500,560 | |
State Street Corp. | 281,200 | 23,994,796 | |
77,894,653 | |||
Financial Exchanges & Data - 1.7% | |||
Bolsa Mexicana de Valores S.A.B. de CV | 1,964,600 | 3,762,102 | |
Cboe Global Markets, Inc. | 87,100 | 10,215,959 | |
13,978,061 | |||
Investment Banking & Brokerage - 7.2% | |||
Lazard Ltd. Class A | 243,492 | 8,419,953 | |
Morgan Stanley | 327,500 | 29,717,350 | |
Raymond James Financial, Inc. | 148,100 | 16,239,165 | |
Virtu Financial, Inc. Class A | 129,700 | 4,549,876 | |
58,926,344 | |||
TOTAL CAPITAL MARKETS | 150,799,058 | ||
Consumer Finance - 7.5% | |||
Consumer Finance - 7.5% | |||
American Express Co. | 136,400 | 26,535,256 | |
Capital One Financial Corp. | 174,800 | 26,791,596 | |
OneMain Holdings, Inc. | 164,900 | 8,406,602 | |
61,733,454 | |||
Diversified Financial Services - 2.3% | |||
Multi-Sector Holdings - 0.9% | |||
Cannae Holdings, Inc. (a) | 263,690 | 7,080,077 | |
Other Diversified Financial Services - 1.4% | |||
Apollo Global Management, Inc. | 182,000 | 11,877,320 | |
Phoenix Vega Mezz PLC (a) | 380,900 | 24,128 | |
11,901,448 | |||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 18,981,525 | ||
Insurance - 22.9% | |||
Insurance Brokers - 3.6% | |||
Arthur J. Gallagher & Co. | 121,900 | 19,283,361 | |
Marsh & McLennan Companies, Inc. | 67,300 | 10,459,093 | |
29,742,454 | |||
Life & Health Insurance - 2.6% | |||
Globe Life, Inc. | 146,500 | 14,790,640 | |
Primerica, Inc. | 50,300 | 6,533,467 | |
21,324,107 | |||
Multi-Line Insurance - 4.5% | |||
American International Group, Inc. | 222,200 | 13,607,528 | |
Assurant, Inc. | 82,500 | 14,001,075 | |
Hartford Financial Services Group, Inc. | 131,600 | 9,143,568 | |
36,752,171 | |||
Property & Casualty Insurance - 10.3% | |||
American Financial Group, Inc. | 53,100 | 7,189,209 | |
Chubb Ltd. | 85,700 | 17,451,948 | |
Fidelity National Financial, Inc. | 223,200 | 10,633,248 | |
First American Financial Corp. | 98,600 | 6,610,144 | |
Hiscox Ltd. | 627,200 | 7,717,621 | |
Old Republic International Corp. | 224,800 | 5,923,480 | |
The Travelers Companies, Inc. | 166,000 | 28,523,780 | |
84,049,430 | |||
Reinsurance - 1.9% | |||
Reinsurance Group of America, Inc. | 143,800 | 15,941,668 | |
TOTAL INSURANCE | 187,809,830 | ||
IT Services - 3.2% | |||
Data Processing & Outsourced Services - 3.2% | |||
Computer Services, Inc. | 28,981 | 1,580,334 | |
Global Payments, Inc. | 94,600 | 12,617,748 | |
MasterCard, Inc. Class A | 32,100 | 11,582,322 | |
25,780,404 | |||
Professional Services - 1.9% | |||
Research & Consulting Services - 1.9% | |||
Dun & Bradstreet Holdings, Inc. (a)(b) | 382,900 | 7,106,624 | |
Equifax, Inc. | 39,900 | 8,711,766 | |
15,818,390 | |||
Software - 0.9% | |||
Application Software - 0.9% | |||
Black Knight, Inc. (a) | 125,700 | 7,063,083 | |
Thrifts & Mortgage Finance - 5.5% | |||
Thrifts & Mortgage Finance - 5.5% | |||
Essent Group Ltd. | 322,638 | 14,254,147 | |
MGIC Investment Corp. | 709,100 | 10,764,138 | |
NMI Holdings, Inc. (a) | 609,643 | 14,107,139 | |
Radian Group, Inc. | 57,200 | 1,367,080 | |
Walker & Dunlop, Inc. | 33,200 | 4,593,220 | |
45,085,724 | |||
TOTAL COMMON STOCKS | |||
(Cost $616,947,886) | 815,049,490 | ||
Money Market Funds - 2.8% | |||
Fidelity Cash Central Fund 0.07% (c) | 3,553,473 | 3,554,184 | |
Fidelity Securities Lending Cash Central Fund 0.07% (c)(d) | 19,551,645 | 19,553,600 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $23,107,784) | 23,107,784 | ||
TOTAL INVESTMENT IN SECURITIES - 102.2% | |||
(Cost $640,055,670) | 838,157,274 | ||
NET OTHER ASSETS (LIABILITIES) - (2.2)% | (18,247,542) | ||
NET ASSETS - 100% | $819,909,732 |
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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $3,527,615 | $293,497,202 | $293,470,633 | $3,200 | $-- | $-- | $3,554,184 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | -- | 155,303,193 | 135,749,593 | 5,745 | -- | -- | 19,553,600 | 0.1% |
Total | $3,527,615 | $448,800,395 | $429,220,226 | $8,945 | $-- | $-- | $23,107,784 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $815,049,490 | $806,704,489 | $8,345,001 | $-- |
Money Market Funds | 23,107,784 | 23,107,784 | -- | -- |
Total Investments in Securities: | $838,157,274 | $829,812,273 | $8,345,001 | $-- |
See accompanying notes which are an integral part of the financial statements.
Financial Services Portfolio
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $19,192,431) — See accompanying schedule: Unaffiliated issuers (cost $616,947,886) | $815,049,490 | |
Fidelity Central Funds (cost $23,107,784) | 23,107,784 | |
Total Investment in Securities (cost $640,055,670) | $838,157,274 | |
Receivable for fund shares sold | 4,185,568 | |
Dividends receivable | 1,147,974 | |
Distributions receivable from Fidelity Central Funds | 1,007 | |
Prepaid expenses | 5,471 | |
Other receivables | 11,324 | |
Total assets | 843,508,618 | |
Liabilities | ||
Payable for fund shares redeemed | 3,526,238 | |
Accrued management fee | 359,340 | |
Other affiliated payables | 122,056 | |
Other payables and accrued expenses | 37,652 | |
Collateral on securities loaned | 19,553,600 | |
Total liabilities | 23,598,886 | |
Net Assets | $819,909,732 | |
Net Assets consist of: | ||
Paid in capital | $587,860,339 | |
Total accumulated earnings (loss) | 232,049,393 | |
Net Assets | $819,909,732 | |
Net Asset Value, offering price and redemption price per share ($819,909,732 ÷ 61,952,786 shares) | $13.23 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $21,711,930 | |
Income from Fidelity Central Funds (including $5,745 from security lending) | 8,945 | |
Total income | 21,720,875 | |
Expenses | ||
Management fee | $4,370,219 | |
Transfer agent fees | 1,225,270 | |
Accounting fees | 286,066 | |
Custodian fees and expenses | 16,597 | |
Independent trustees' fees and expenses | 2,865 | |
Registration fees | 99,529 | |
Audit | 40,097 | |
Legal | 2,198 | |
Interest | 67 | |
Miscellaneous | 4,617 | |
Total expenses before reductions | 6,047,525 | |
Expense reductions | (18,328) | |
Total expenses after reductions | 6,029,197 | |
Net investment income (loss) | 15,691,678 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 64,209,388 | |
Foreign currency transactions | 4,785 | |
Total net realized gain (loss) | 64,214,173 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | 59,571,347 | |
Assets and liabilities in foreign currencies | (32) | |
Total change in net unrealized appreciation (depreciation) | 59,571,315 | |
Net gain (loss) | 123,785,488 | |
Net increase (decrease) in net assets resulting from operations | $139,477,166 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $15,691,678 | $10,290,805 |
Net realized gain (loss) | 64,214,173 | (3,240,756) |
Change in net unrealized appreciation (depreciation) | 59,571,315 | 109,247,900 |
Net increase (decrease) in net assets resulting from operations | 139,477,166 | 116,297,949 |
Distributions to shareholders | (29,541,664) | (29,274,755) |
Share transactions | ||
Proceeds from sales of shares | 634,993,625 | 213,063,603 |
Reinvestment of distributions | 27,204,727 | 27,752,133 |
Cost of shares redeemed | (558,271,824) | (205,127,889) |
Net increase (decrease) in net assets resulting from share transactions | 103,926,528 | 35,687,847 |
Total increase (decrease) in net assets | 213,862,030 | 122,711,041 |
Net Assets | ||
Beginning of period | 606,047,702 | 483,336,661 |
End of period | $819,909,732 | $606,047,702 |
Other Information | ||
Shares | ||
Sold | 48,475,233 | 23,964,944 |
Issued in reinvestment of distributions | 2,146,844 | 3,577,346 |
Redeemed | (42,497,145) | (24,643,342) |
Net increase (decrease) | 8,124,932 | 2,898,948 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Financial Services Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B | 2018 B |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $11.26 | $9.49 | $9.65 | $11.67 | $10.31 |
Income from Investment Operations | |||||
Net investment income (loss)C,D | .25 | .20 | .19 | .14 | .09 |
Net realized and unrealized gain (loss) | 2.26 | 2.17 | .26 | (1.04) | 1.76 |
Total from investment operations | 2.51 | 2.37 | .45 | (.90) | 1.85 |
Distributions from net investment income | (.26) | (.21) | (.16) | (.14) | (.07) |
Distributions from net realized gain | (.28) | (.39) | (.45) | (.98) | (.42) |
Total distributions | (.54) | (.60) | (.61) | (1.12) | (.49) |
Net asset value, end of period | $13.23 | $11.26 | $9.49 | $9.65 | $11.67 |
Total ReturnE | 22.47% | 27.89% | 3.81% | (6.91)% | 18.33% |
Ratios to Average Net AssetsD,F,G | |||||
Expenses before reductions | .73% | .77% | .77% | .76% | .77% |
Expenses net of fee waivers, if any | .72% | .77% | .77% | .76% | .77% |
Expenses net of all reductions | .72% | .77% | .76% | .75% | .76% |
Net investment income (loss) | 1.89% | 2.36% | 1.81% | 1.28% | .87% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $819,910 | $606,048 | $483,337 | $558,429 | $1,308,254 |
Portfolio turnover rateH | 53% | 63% | 61%I | 49%I | 54% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on August 10, 2018.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
H Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
FinTech 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, 2022 | Past 1 year | Past 5 years | Past 10 years |
FinTech Portfolio | (0.75)% | 9.38% | 11.55% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in FinTech Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789798379_740.jpg)
Period Ending Values | ||
$29,834 | FinTech Portfolio | |
$39,037 | S&P 500® Index |
FinTech Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Ruth Nagle: For the fiscal year, the fund returned -0.75%, trailing the -0.23% result of the FactSet Financial Technologies Linked Index, as well as the broad-based S&P 500® index. The largest detractors from performance versus the industry index were an overweighting and security selection in application software. Also detracting from our relative result was an overweighting in data processing & outsourced services and an underweighting in consumer finance. The fund's biggest individual relative detractor was an underweighting in Credit Acceptance (+65%), which was not held at period end. Another notable relative detractor was an overweighting in Global Payments (-33%), a position we added to this period. Further hindering performance was Visa, which gained 2%. We increased our stake the past 12 months, making the stock a top holding at period end. In contrast, the biggest boost to performance versus the industry index came from an underweighting and stock picks in the thrifts & mortgage finance segment. Security selection in the mortgage REITs (real estate investment trusts) and regional banks groups also helped relative performance. The fund's top individual relative contributor was an overweighting in Mastercard, which gained 2% the past year. It was the fund's largest holding on February 28. Also bolstering performance were our lighter-than-index stakes in TFS Financial (+5%) and Annaly Capital Management (+14%). Neither Annaly nor TFS was held at period end. Notable changes in positioning include significantly increased exposure to the data processing & outsourced services subindustry and a notably lower allocation to consumer finance.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: Following Board approval in May 2021, Fidelity® Select Consumer Finance Portfolio was repositioned with a broader, modernized mandate and renamed Fidelity® Select FinTech Portfolio, effective October 23, 2021. In conjunction with the repositioning, Fidelity changed the fund’s supplemental benchmark to the FactSet Financial Technologies Linked Index, which better reflects the fund’s updated investment focus. On February 10, 2022, Ruth Nagle assumed management responsibilities for the fund, succeeding Chuck Culp.FinTech Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
MasterCard, Inc. Class A | 15.6 |
Intuit, Inc. | 11.2 |
Visa, Inc. Class A | 11.0 |
American Express Co. | 5.6 |
Capital One Financial Corp. | 5.6 |
PayPal Holdings, Inc. | 5.0 |
Fidelity National Information Services, Inc. | 4.9 |
Discover Financial Services | 4.9 |
Global Payments, Inc. | 4.3 |
Adyen BV | 4.2 |
72.3 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
IT Services | 60.4% | |
Software | 19.5% | |
Consumer Finance | 17.8% | |
Banks | 0.8% | |
All Others* | 1.5% |
* Includes short-term investments and net other assets (liabilities).
FinTech Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 98.5% | |||
Shares | Value | ||
Banks - 0.8% | |||
Diversified Banks - 0.5% | |||
Wells Fargo & Co. | 15,582 | $831,611 | |
Regional Banks - 0.3% | |||
Signature Bank | 1,147 | 395,589 | |
TOTAL BANKS | 1,227,200 | ||
Consumer Finance - 17.8% | |||
Consumer Finance - 17.8% | |||
Ally Financial, Inc. | 5,800 | 289,420 | |
American Express Co. | 46,596 | 9,064,786 | |
Capital One Financial Corp. | 58,751 | 9,004,766 | |
Discover Financial Services | 63,807 | 7,876,336 | |
LendingClub Corp. (a) | 20,356 | 378,214 | |
OneMain Holdings, Inc. | 39,313 | 2,004,177 | |
Upstart Holdings, Inc. (a)(b) | 1,200 | 189,588 | |
28,807,287 | |||
IT Services - 60.4% | |||
Data Processing & Outsourced Services - 60.4% | |||
Adyen BV (a)(c) | 3,279 | 6,834,333 | |
Affirm Holdings, Inc. (a)(b) | 24,354 | 1,018,971 | |
Block, Inc.: | |||
Class A (a) | 48,112 | 6,134,280 | |
Class A unit (a) | 4,791 | 540,398 | |
Dlocal Ltd. | 12,331 | 402,607 | |
Edenred SA | 54,353 | 2,473,328 | |
EVO Payments, Inc. Class A (a) | 20,863 | 503,007 | |
Fidelity National Information Services, Inc. | 83,236 | 7,926,564 | |
Fiserv, Inc. (a) | 37,032 | 3,616,915 | |
FleetCor Technologies, Inc. (a) | 21,747 | 5,093,147 | |
Flywire Corp. (a)(b) | 68,364 | 1,849,930 | |
Global Payments, Inc. | 51,978 | 6,932,826 | |
MasterCard, Inc. Class A | 70,024 | 25,266,062 | |
MoneyGram International, Inc. (a) | 19,400 | 208,356 | |
Nuvei Corp. (a)(c) | 22,591 | 1,226,420 | |
PagSeguro Digital Ltd. (a)(b) | 63,360 | 1,009,958 | |
PayPal Holdings, Inc. (a) | 71,609 | 8,015,195 | |
Remitly Global, Inc. | 2,500 | 27,375 | |
Repay Holdings Corp. (a)(b) | 50,978 | 880,390 | |
Visa, Inc. Class A | 82,347 | 17,796,834 | |
97,756,896 | |||
Software - 19.5% | |||
Application Software - 19.5% | |||
Avalara, Inc. (a)(b) | 17,275 | 1,795,045 | |
Bill.Com Holdings, Inc. (a) | 16,926 | 4,026,357 | |
Black Knight, Inc. (a) | 52,214 | 2,933,905 | |
BTRS Holdings, Inc. (a)(b) | 56,484 | 344,552 | |
EngageSmart, Inc. (b) | 70,137 | 1,543,014 | |
Guidewire Software, Inc. (a)(b) | 12,899 | 1,137,047 | |
Intuit, Inc. | 38,072 | 18,060,215 | |
Lightspeed Commerce, Inc. (Canada) (a) | 14,019 | 368,310 | |
Workiva, Inc. (a)(b) | 13,558 | 1,427,657 | |
31,636,102 | |||
TOTAL COMMON STOCKS | |||
(Cost $165,335,583) | 159,427,485 | ||
Money Market Funds - 5.9% | |||
Fidelity Cash Central Fund 0.07% (d) | 870,096 | 870,270 | |
Fidelity Securities Lending Cash Central Fund 0.07% (d)(e) | 8,601,458 | 8,602,318 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $9,472,588) | 9,472,588 | ||
TOTAL INVESTMENT IN SECURITIES - 104.4% | |||
(Cost $174,808,171) | 168,900,073 | ||
NET OTHER ASSETS (LIABILITIES) - (4.4)% | (7,048,794) | ||
NET ASSETS - 100% | $161,851,279 |
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 $8,060,753 or 5.0% 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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $355,405 | $93,225,392 | $92,710,527 | $2,141 | $-- | $-- | $870,270 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 3,320,368 | 71,798,437 | 66,516,487 | 10,501 | -- | -- | 8,602,318 | 0.0% |
Total | $3,675,773 | $165,023,829 | $159,227,014 | $12,642 | $-- | $-- | $9,472,588 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $159,427,485 | $150,119,824 | $9,307,661 | $-- |
Money Market Funds | 9,472,588 | 9,472,588 | -- | -- |
Total Investments in Securities: | $168,900,073 | $159,592,412 | $9,307,661 | $-- |
See accompanying notes which are an integral part of the financial statements.
FinTech Portfolio
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $8,551,349) — See accompanying schedule: Unaffiliated issuers (cost $165,335,583) | $159,427,485 | |
Fidelity Central Funds (cost $9,472,588) | 9,472,588 | |
Total Investment in Securities (cost $174,808,171) | $168,900,073 | |
Receivable for investments sold | 3,429,770 | |
Receivable for fund shares sold | 46,471 | |
Dividends receivable | 67,114 | |
Distributions receivable from Fidelity Central Funds | 624 | |
Prepaid expenses | 576 | |
Other receivables | 29,651 | |
Total assets | 172,474,279 | |
Liabilities | ||
Payable for investments purchased | $1,627,460 | |
Payable for fund shares redeemed | 240,719 | |
Accrued management fee | 74,705 | |
Other affiliated payables | 38,934 | |
Other payables and accrued expenses | 39,707 | |
Collateral on securities loaned | 8,601,475 | |
Total liabilities | 10,623,000 | |
Net Assets | $161,851,279 | |
Net Assets consist of: | ||
Paid in capital | $174,978,423 | |
Total accumulated earnings (loss) | (13,127,144) | |
Net Assets | $161,851,279 | |
Net Asset Value, offering price and redemption price per share ($161,851,279 ÷ 10,074,792 shares) | $16.06 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $3,029,096 | |
Special dividends | 569,387 | |
Income from Fidelity Central Funds (including $10,501 from security lending) | 12,642 | |
Total income | 3,611,125 | |
Expenses | ||
Management fee | $1,317,739 | |
Transfer agent fees | 481,189 | |
Accounting fees | 97,709 | |
Custodian fees and expenses | 19,117 | |
Independent trustees' fees and expenses | 866 | |
Registration fees | 56,749 | |
Audit | 38,840 | |
Legal | 4,573 | |
Interest | 677 | |
Miscellaneous | 19,539 | |
Total expenses before reductions | 2,036,998 | |
Expense reductions | (6,061) | |
Total expenses after reductions | 2,030,937 | |
Net investment income (loss) | 1,580,188 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 42,686,327 | |
Foreign currency transactions | (10,392) | |
Total net realized gain (loss) | 42,675,935 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | (51,830,665) | |
Assets and liabilities in foreign currencies | 380 | |
Total change in net unrealized appreciation (depreciation) | (51,830,285) | |
Net gain (loss) | (9,154,350) | |
Net increase (decrease) in net assets resulting from operations | $(7,574,162) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $1,580,188 | $2,680,400 |
Net realized gain (loss) | 42,675,935 | (1,770,483) |
Change in net unrealized appreciation (depreciation) | (51,830,285) | 19,426,786 |
Net increase (decrease) in net assets resulting from operations | (7,574,162) | 20,336,703 |
Distributions to shareholders | (37,026,602) | (2,613,470) |
Share transactions | ||
Proceeds from sales of shares | 281,706,628 | 60,803,718 |
Reinvestment of distributions | 33,727,405 | 2,390,791 |
Cost of shares redeemed | (253,862,105) | (84,284,960) |
Net increase (decrease) in net assets resulting from share transactions | 61,571,928 | (21,090,451) |
Total increase (decrease) in net assets | 16,971,164 | (3,367,218) |
Net Assets | ||
Beginning of period | 144,880,115 | 148,247,333 |
End of period | $161,851,279 | $144,880,115 |
Other Information | ||
Shares | ||
Sold | 12,489,588 | 4,293,129 |
Issued in reinvestment of distributions | 1,901,219 | 153,801 |
Redeemed | (11,797,499) | (6,098,211) |
Net increase (decrease) | 2,593,308 | (1,651,281) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
FinTech Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $19.37 | $16.23 | $15.80 | $16.29 | $14.02 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .14D | .34E | .39 | .24 | .20 |
Net realized and unrealized gain (loss) | .04F,G | 3.14 | .35 | .43 | 2.33H |
Total from investment operations | .18 | 3.48 | .74 | .67 | 2.53 |
Distributions from net investment income | (.25) | (.34) | (.31) | (.20) | (.26) |
Distributions from net realized gain | (3.24) | – | (.01) | (.95) | – |
Total distributions | (3.49) | (.34) | (.31)I | (1.16)I | (.26) |
Redemption fees added to paid in capitalB | – | – | – | – | –J |
Net asset value, end of period | $16.06 | $19.37 | $16.23 | $15.80 | $16.29 |
Total ReturnK | (.75)%G | 21.94% | 4.54% | 4.83% | 18.07%H |
Ratios to Average Net AssetsC,L,M | |||||
Expenses before reductions | .81% | .89% | .86% | .87% | .90% |
Expenses net of fee waivers, if any | .81% | .89% | .86% | .87% | .89% |
Expenses net of all reductions | .81% | .89% | .85% | .86% | .89% |
Net investment income (loss) | .63%D | 2.35%E | 2.29% | 1.57% | 1.38% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $161,851 | $144,880 | $148,247 | $102,334 | $104,105 |
Portfolio turnover rateN | 164% | 25% | 20% | 32% | 81% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.05 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .40%.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.07 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.89%.
F 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.
G Net realized and unrealized gain (loss) per share reflects proceeds received from litigation which amounted to $.01 per share. Excluding these litigation proceeds, the total return would have been (.78)%.
H Net realized and unrealized gain (loss) per share reflects proceeds received from litigation which amounted to $.28 per share. Excluding these litigation proceeds, the total return would have been 16.18%.
I Total distributions per share do not sum due to rounding.
J Amount represents less than $.005 per share.
K Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
L Fees and expenses of any underlying mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
M Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
N Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Insurance Portfolio | 24.68% | 10.78% | 14.10% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Insurance Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789798118_740.jpg)
Period Ending Values | ||
$37,388 | Insurance Portfolio | |
$39,037 | S&P 500® Index |
Insurance Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Peter Deutsch: For the fiscal year ending February 28, 2022, the fund gained 24.68%, outperforming the 24.37% advance of the MSCI U.S. IMI Insurance 25/50 Index, as well as the broad-based S&P 500® index. The top contributor to performance versus the industry index was security selection in the property & casualty insurance category. An overweighting among multi-line insurance stocks and favorable picks in the insurance brokers group also bolstered the portfolio's relative result. A non-index stake in Ares Management was the fund's leading individual relative contributor, driven by an advance of approximately 60%. Our second-largest relative contributor this period was the decision to avoid the shares of Erie Indemnity, an index component that returned -26%. Not owning RenaissanceRe Holdings, an index component that returned -9%, also proved beneficial. In contrast, the primary detractor from performance versus the industry index were stock picks among multi-line insurance firms. Weak investment choices in the life & health insurance and reinsurance segments further hampered the portfolio's relative return the past year. The fund's biggest individual relative detractor was an overweighting in Reinsurance Group of America, which returned -7% during the period. The portfolio's stake in Apollo Global Management, a non-index position we established this period, returned about -8% and further weighed on relative performance. Also detracting was our outsized stake in Primerica, which returned -7%. Notable changes in positioning the past 12 months include increased exposure to multi-line insurance companies.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, 2022
% of fund's net assets | |
Chubb Ltd. | 9.6 |
Marsh & McLennan Companies, Inc. | 9.5 |
The Travelers Companies, Inc. | 8.6 |
American International Group, Inc. | 7.5 |
Arthur J. Gallagher & Co. | 4.7 |
MetLife, Inc. | 4.6 |
Progressive Corp. | 4.4 |
Aon PLC | 4.2 |
Hartford Financial Services Group, Inc. | 4.1 |
Allstate Corp. | 3.6 |
60.8 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Insurance | 90.6% | |
Diversified Financial Services | 5.4% | |
Capital Markets | 2.5% | |
Consumer Finance | 0.4% | |
All Others* | 1.1% |
* Includes short-term investments and net other assets (liabilities).
Insurance Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 98.9% | |||
Shares | Value | ||
Capital Markets - 2.5% | |||
Asset Management & Custody Banks - 2.3% | |||
Ares Management Corp. | 57,114 | $4,631,374 | |
BlackRock, Inc. Class A | 1,400 | 1,041,446 | |
5,672,820 | |||
Financial Exchanges & Data - 0.2% | |||
Moody's Corp. | 1,300 | 418,639 | |
TOTAL CAPITAL MARKETS | 6,091,459 | ||
Consumer Finance - 0.4% | |||
Consumer Finance - 0.4% | |||
OneMain Holdings, Inc. | 21,000 | 1,070,580 | |
Diversified Financial Services - 5.4% | |||
Multi-Sector Holdings - 2.7% | |||
Berkshire Hathaway, Inc. Class B (a) | 20,700 | 6,654,015 | |
Other Diversified Financial Services - 2.7% | |||
Apollo Global Management, Inc. | 102,037 | 6,658,935 | |
Jackson Financial, Inc. | 895 | 36,597 | |
6,695,532 | |||
TOTAL DIVERSIFIED FINANCIAL SERVICES | 13,349,547 | ||
Insurance - 90.6% | |||
Insurance Brokers - 24.2% | |||
Aon PLC | 35,500 | 10,370,970 | |
Arthur J. Gallagher & Co. | 73,200 | 11,579,508 | |
Brown & Brown, Inc. | 106,200 | 7,180,182 | |
Marsh & McLennan Companies, Inc. | 150,600 | 23,404,746 | |
Willis Towers Watson PLC | 30,928 | 6,875,294 | |
59,410,700 | |||
Life & Health Insurance - 14.0% | |||
AFLAC, Inc. | 38,300 | 2,339,747 | |
CNO Financial Group, Inc. | 126,100 | 3,047,837 | |
Globe Life, Inc. | 30,400 | 3,069,184 | |
MetLife, Inc. | 169,175 | 11,427,771 | |
Primerica, Inc. | 22,200 | 2,883,558 | |
Principal Financial Group, Inc. | 69,500 | 4,909,480 | |
Prudential Financial, Inc. | 55,189 | 6,162,404 | |
Prudential PLC (a) | 38,600 | 583,573 | |
34,423,554 | |||
Multi-Line Insurance - 13.7% | |||
American International Group, Inc. | 302,750 | 18,540,410 | |
Assurant, Inc. | 19,600 | 3,326,316 | |
China Pacific Insurance (Group) Co. Ltd. (H Shares) | 177,400 | 493,749 | |
Hartford Financial Services Group, Inc. | 146,700 | 10,192,716 | |
Zurich Insurance Group Ltd. | 2,466 | 1,131,884 | |
33,685,075 | |||
Property & Casualty Insurance - 35.5% | |||
Allstate Corp. | 72,800 | 8,907,808 | |
American Financial Group, Inc. | 200 | 27,078 | |
Arch Capital Group Ltd. (a) | 115,700 | 5,450,627 | |
Assured Guaranty Ltd. | 72,600 | 4,499,022 | |
Chubb Ltd. | 115,505 | 23,521,438 | |
Cincinnati Financial Corp. | 12,700 | 1,559,433 | |
Fidelity National Financial, Inc. | 40,500 | 1,929,420 | |
First American Financial Corp. | 41,000 | 2,748,640 | |
Loews Corp. | 64,500 | 3,956,430 | |
Markel Corp. (a) | 2,120 | 2,634,969 | |
Mercury General Corp. | 200 | 11,000 | |
Progressive Corp. | 102,700 | 10,879,011 | |
The Travelers Companies, Inc. | 123,500 | 21,221,005 | |
87,345,881 | |||
Reinsurance - 3.2% | |||
Everest Re Group Ltd. | 3,500 | 1,043,770 | |
Maiden Holdings Ltd. (a)(b) | 400 | 976 | |
Reinsurance Group of America, Inc. | 61,700 | 6,840,062 | |
7,884,808 | |||
TOTAL INSURANCE | 222,750,018 | ||
TOTAL COMMON STOCKS | |||
(Cost $120,249,478) | 243,261,604 | ||
Money Market Funds - 0.8% | |||
Fidelity Cash Central Fund 0.07% (c) | 1,824,127 | 1,824,492 | |
Fidelity Securities Lending Cash Central Fund 0.07% (c)(d) | 550 | 550 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $1,825,042) | 1,825,042 | ||
TOTAL INVESTMENT IN SECURITIES - 99.7% | |||
(Cost $122,074,520) | 245,086,646 | ||
NET OTHER ASSETS (LIABILITIES) - 0.3% | 843,857 | ||
NET ASSETS - 100% | $245,930,503 |
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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $2,833,851 | $54,332,428 | $55,341,787 | $803 | $-- | $-- | $1,824,492 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | -- | 32,799,786 | 32,799,236 | 555 | -- | -- | 550 | 0.0% |
Total | $2,833,851 | $87,132,214 | $88,141,023 | $1,358 | $-- | $-- | $1,825,042 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $243,261,604 | $241,546,147 | $1,715,457 | $-- |
Money Market Funds | 1,825,042 | 1,825,042 | -- | -- |
Total Investments in Securities: | $245,086,646 | $243,371,189 | $1,715,457 | $-- |
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 | 78.1% |
Switzerland | 10.1% |
Bermuda | 4.4% |
Ireland | 4.2% |
United Kingdom | 3.0% |
Others (Individually Less Than 1%) | 0.2% |
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, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $488) — See accompanying schedule: Unaffiliated issuers (cost $120,249,478) | $243,261,604 | |
Fidelity Central Funds (cost $1,825,042) | 1,825,042 | |
Total Investment in Securities (cost $122,074,520) | $245,086,646 | |
Receivable for fund shares sold | 829,427 | |
Dividends receivable | 406,358 | |
Distributions receivable from Fidelity Central Funds | 190 | |
Prepaid expenses | 1,411 | |
Other receivables | 310 | |
Total assets | 246,324,342 | |
Liabilities | ||
Payable for fund shares redeemed | $214,117 | |
Accrued management fee | 105,389 | |
Audit fee payable | 31,466 | |
Transfer agent fee payable | 33,487 | |
Other affiliated payables | 7,821 | |
Other payables and accrued expenses | 1,009 | |
Collateral on securities loaned | 550 | |
Total liabilities | 393,839 | |
Net Assets | $245,930,503 | |
Net Assets consist of: | ||
Paid in capital | $123,333,899 | |
Total accumulated earnings (loss) | 122,596,604 | |
Net Assets | $245,930,503 | |
Net Asset Value, offering price and redemption price per share ($245,930,503 ÷ 3,520,257 shares) | $69.86 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $4,139,047 | |
Income from Fidelity Central Funds (including $555 from security lending) | 1,358 | |
Total income | 4,140,405 | |
Expenses | ||
Management fee | $1,122,021 | |
Transfer agent fees | 393,931 | |
Accounting fees | 83,192 | |
Custodian fees and expenses | 3,418 | |
Independent trustees' fees and expenses | 748 | |
Registration fees | 25,833 | |
Audit | 38,840 | |
Legal | 356 | |
Miscellaneous | 1,290 | |
Total expenses before reductions | 1,669,629 | |
Expense reductions | (4,813) | |
Total expenses after reductions | 1,664,816 | |
Net investment income (loss) | 2,475,589 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 6,591,215 | |
Foreign currency transactions | 121 | |
Total net realized gain (loss) | 6,591,336 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | 35,823,464 | |
Assets and liabilities in foreign currencies | (1,441) | |
Total change in net unrealized appreciation (depreciation) | 35,822,023 | |
Net gain (loss) | 42,413,359 | |
Net increase (decrease) in net assets resulting from operations | $44,888,948 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $2,475,589 | $2,932,917 |
Net realized gain (loss) | 6,591,336 | 15,506,232 |
Change in net unrealized appreciation (depreciation) | 35,822,023 | 2,201,218 |
Net increase (decrease) in net assets resulting from operations | 44,888,948 | 20,640,367 |
Distributions to shareholders | (17,750,181) | (16,870,459) |
Share transactions | ||
Proceeds from sales of shares | 71,913,727 | 34,006,375 |
Reinvestment of distributions | 16,623,368 | 15,964,972 |
Cost of shares redeemed | (54,446,500) | (88,579,235) |
Net increase (decrease) in net assets resulting from share transactions | 34,090,595 | (38,607,888) |
Total increase (decrease) in net assets | 61,229,362 | (34,837,980) |
Net Assets | ||
Beginning of period | 184,701,141 | 219,539,121 |
End of period | $245,930,503 | $184,701,141 |
Other Information | ||
Shares | ||
Sold | 1,054,727 | 655,154 |
Issued in reinvestment of distributions | 256,213 | 317,057 |
Redeemed | (810,083) | (1,709,560) |
Net increase (decrease) | 500,857 | (737,349) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Insurance Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $61.17 | $58.44 | $59.27 | $78.49 | $80.60 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .78 | .88 | .87 | .98 | 1.08 |
Net realized and unrealized gain (loss) | 13.73 | 6.99 | 2.77 | (2.40) | 6.76 |
Total from investment operations | 14.51 | 7.87 | 3.64 | (1.42) | 7.84 |
Distributions from net investment income | (.89) | (.94) | (.91) | (1.16) | (.96) |
Distributions from net realized gain | (4.93) | (4.20) | (3.56) | (16.63) | (8.99) |
Total distributions | (5.82) | (5.14) | (4.47) | (17.80)D | (9.95) |
Redemption fees added to paid in capitalB | – | – | – | – | –E |
Net asset value, end of period | $69.86 | $61.17 | $58.44 | $59.27 | $78.49 |
Total ReturnF | 24.68% | 15.54% | 5.95% | (.29)% | 9.62% |
Ratios to Average Net AssetsC,G,H | |||||
Expenses before reductions | .78% | .83% | .81% | .82% | .79% |
Expenses net of fee waivers, if any | .78% | .83% | .81% | .81% | .79% |
Expenses net of all reductions | .78% | .83% | .80% | .81% | .79% |
Net investment income (loss) | 1.16% | 1.68% | 1.37% | 1.48% | 1.30% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $245,931 | $184,701 | $219,539 | $223,081 | $341,743 |
Portfolio turnover rateI | 15% | 18% | 28% | 9% | 21% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2022
1. Organization.
Banking Portfolio, Brokerage and Investment Management Portfolio, Financial Services Portfolio, FinTech Portfolio (formerly Consumer Finance Portfolio) and Insurance 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.
Funds may 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
Based on its investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the investing fund. These strategies are consistent with the investment objectives of the investing fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the investing fund.
Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio(a) |
Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | Less than .005% |
(a) Expenses expressed as a percentage of average net assets and are as of each underlying Central Fund's most recent annual or semi-annual shareholder report.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which contain the significant accounting policies (including investment valuation policies) of those funds, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission website or upon request.
3. Significant Accounting Policies.
Each Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies. 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. Each Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. The following summarizes the significant accounting policies of each 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 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 – Unadjusted 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. 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, 2022 is included at the end of each Fund's Schedule of Investments.
Foreign Currency. Certain 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 for certain Funds include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable.
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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. 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 certain Funds, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in affiliated mutual funds, are marked-to-market and remain in a fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees presented below are included in the accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, as applicable.
Brokerage and Investment Management Portfolio | $55,705 |
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, 2022, 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), partnerships, equity-debt classifications, deferred Trustee compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows for each Fund:
Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) | |
Banking Portfolio | $561,529,866 | $197,281,475 | $(8,154,613) | $189,126,862 |
Brokerage and Investment Management Portfolio | 1,039,497,674 | 291,063,230 | (70,371,182) | 220,692,048 |
Financial Services Portfolio | 642,290,097 | 211,551,611 | (15,684,434) | 195,867,177 |
FinTech Portfolio | 175,567,496 | 31,044,006 | (37,711,429) | (6,667,423) |
Insurance Portfolio | 122,407,397 | 123,863,714 | (1,184,465) | 122,679,249 |
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 | |
Banking Portfolio | $1,904,261 | $10,118,524 | $189,126,862 |
Brokerage and Investment Management Portfolio | 2,000,268 | 3,327,041 | 220,691,986 |
Financial Services Portfolio | 2,181,365 | 34,001,896 | 195,866,131 |
FinTech Portfolio | – | – | (6,667,043) |
Insurance Portfolio | – | – | 122,680,193 |
Certain of the Funds intend to elect to defer to the next fiscal year capital losses recognized during the period November 1, 2021 to February 28, 2022, and ordinary losses recognized during the period January 1, 2022 to February 28, 2022. Loss deferrals were as follows:
Capital losses | Ordinary losses | |
FinTech Portfolio | $(5,474,286) | $(985,815) |
Insurance Portfolio | (83,589) | – |
The tax character of distributions paid was as follows:
February 28, 2022 | |||
Ordinary Income | Long-term Capital Gains | Total | |
Banking Portfolio | $10,967,463 | $9,331,485 | $20,298,948 |
Brokerage and Investment Management Portfolio | 7,406,134 | 4,552,818 | 11,958,952 |
Financial Services Portfolio | 15,183,491 | 14,358,173 | 29,541,664 |
FinTech Portfolio | 3,215,617 | 33,810,985 | 37,026,602 |
Insurance Portfolio | 2,910,816 | 14,839,365 | 17,750,181 |
February 28, 2021 | |||
Ordinary Income | Long-term Capital Gains | Total | |
Banking Portfolio | $9,662,838 | $20,957,765 | $30,620,603 |
Brokerage and Investment Management Portfolio | 4,534,924 | 7,377,130 | 11,912,054 |
Financial Services Portfolio | 10,218,684 | 19,056,071 | 29,274,755 |
FinTech Portfolio | 2,613,470 | – | 2,613,470 |
Insurance Portfolio | 2,935,872 | 13,934,587 | 16,870,459 |
Restricted Securities (including Private Placements). Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities held at period end is included at the end of the Schedule of Investments, if applicable.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, as applicable, are noted in the table below.
Purchases ($) | Sales ($) | |
Banking Portfolio | 289,353,008 | 216,553,010 |
Brokerage and Investment Management Portfolio | 763,548,929 | 24,191,092 |
Financial Services Portfolio | 514,850,740 | 426,562,575 |
FinTech Portfolio | 418,486,569 | 392,532,199 |
Insurance Portfolio | 51,604,193 | 32,300,620 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company 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 monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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% | .22% | .53% |
Brokerage and Investment Management Portfolio | .30% | .22% | .53% |
Financial Services Portfolio | .30% | .22% | .53% |
FinTech Portfolio | .30% | .22% | .52% |
Insurance Portfolio | .30% | .22% | .53% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (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 | .15% |
Brokerage and Investment Management Portfolio | .15% |
Financial Services Portfolio | .15% |
FinTech Portfolio | .19% |
Insurance Portfolio | .18% |
Accounting 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. For the period, the fees were equivalent to the following annual rates:
% of Average Net Assets | |
Banking Portfolio | .04 |
Brokerage and Investment Management Portfolio | .03 |
Financial Services Portfolio | .03 |
FinTech Portfolio | .04 |
Insurance Portfolio | .04 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 | $4,761 |
Brokerage and Investment Management Portfolio | 3,547 |
Financial Services Portfolio | 6,343 |
FinTech Portfolio | 17,579 |
Insurance Portfolio | 199 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), each Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing each Fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. 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 | |
Banking Portfolio | Borrower | $8,503,667 | .32% | $446 |
Financial Services Portfolio | Borrower | $7,686,000 | .32% | $67 |
FinTech Portfolio | Borrower | $5,952,077 | .32% | $677 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
Banking Portfolio | 15,858,263 | 5,853,153 | 1,458,050 |
Brokerage and Investment Management Portfolio | 29,871,648 | 2,336,349 | 649,266 |
Financial Services Portfolio | 28,165,566 | 20,431,167 | 3,618,765 |
FinTech Portfolio | 20,566,271 | 22,079,029 | 4,890,053 |
Insurance Portfolio | 17,218 | 509,629 | 1,891 |
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 listed below. During the period, there were no borrowings on this line of credit.
Amount | |
Banking Portfolio | $1,038 |
Brokerage and Investment Management Portfolio | 1,071 |
Financial Services Portfolio | 1,349 |
FinTech Portfolio | 413 |
Insurance Portfolio | 348 |
7. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the 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. Affiliated security lending activity, if any, was as follows:
Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
Banking Portfolio | $614 | $– | $– |
Brokerage and Investment Management Portfolio | 6,439 | – | – |
Financial Services Portfolio | 603 | – | – |
FinTech Portfolio | 1,031 | 155 | – |
Insurance Portfolio | 52 | – | – |
8. Expense Reductions.
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.
Custodian credits | |
Brokerage and Investment Management Portfolio | $23 |
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses as follows:
Amount | |
Banking Portfolio | $14,061 |
Brokerage and Investment Management Portfolio | 19,204 |
Financial Services Portfolio | 18,328 |
FinTech Portfolio | 6,061 |
Insurance Portfolio | 4,813 |
9. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a fund. The risk of material loss from such claims is considered remote.
10. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Funds' performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and the Shareholders of Banking Portfolio, Brokerage and Investment Management Portfolio, Financial Services Portfolio, FinTech Portfolio and Insurance Portfolio
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Banking Portfolio, Brokerage and Investment Management Portfolio, Financial Services Portfolio, FinTech Portfolio and Insurance Portfolio (five of the funds constituting Fidelity Select Portfolios, hereafter collectively referred to as the “Funds”) as of February 28, 2022, the related statements of operations for the year ended February 28, 2022, the statements of changes in net assets for each of the two years in the period ended February 28, 2022, including the related notes, and the financial highlights for each of the five years in the period ended February 28, 2022 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of February 28, 2022, 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 ended February 28, 2022 and each of the financial highlights for each of the five years in the period ended February 28, 2022 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 28, 2022 by correspondence with the custodian 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 opinions.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
April 12, 2022
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
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 317 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. Robert A. Lawrence is an interested person and currently serves as Acting 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. David M. Thomas serves as Lead Independent Trustee 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 high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the funds' Board. 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 FMR 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 FMR, 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, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. 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+
Bettina Doulton (1964)
Year of Election or Appointment: 2020
Trustee
Ms. Doulton also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Doulton served in a variety of positions at Fidelity Investments, including as a managing director of research (2006-2007), portfolio manager to certain Fidelity® funds (1993-2005), equity analyst and portfolio assistant (1990-1993), and research assistant (1987-1990). Ms. Doulton currently owns and operates Phi Builders + Architects and Cellardoor Winery. Previously, Ms. Doulton served as a member of the Board of Brown Capital Management, LLC (2014-2018).
Robert A. Lawrence (1952)
Year of Election or Appointment: 2020
Trustee
Acting Chairman of the Board of Trustees
Mr. Lawrence also serves as Trustee of other funds. Previously, Mr. Lawrence served as a Member of the Advisory Board of certain funds. Prior to his retirement in 2008, Mr. Lawrence served as Vice President of certain Fidelity® funds (2006-2008), Senior Vice President, Head of High Income Division of Fidelity Management & Research Company (investment adviser firm, 2006-2008), and President of Fidelity Strategic Investments (investment adviser firm, 2002-2005).
* 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 FMR.
+ 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+
Thomas P. Bostick (1956)
Year of Election or Appointment: 2021
Trustee
Lieutenant General Bostick also serves as Trustee of other Fidelity® funds. Prior to his retirement, General Bostick (United States Army, Retired) held a variety of positions within the U.S. Army, including Commanding General and Chief of Engineers, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff and Director of Human Resources, U.S. Army (2009-2012). General Bostick currently serves as a member of the Board and Finance and Governance Committees of CSX Corporation (transportation, 2020-present) and a member of the Board and Corporate Governance and Nominating Committee of Perma-Fix Environmental Services, Inc. (nuclear waste management, 2020-present). General Bostick serves as Chief Executive Officer of Bostick Global Strategies, LLC (consulting, 2016-present) and as a member of the Board of HireVue, Inc. (video interview and assessment, 2020-present). Previously, General Bostick served as a Member of the Advisory Board of certain Fidelity® funds (2021), President, Intrexon Bioengineering (2018-2020) and Chief Operating Officer (2017-2020) and Senior Vice President of the Environment Sector (2016-2017) of Intrexon Corporation (biopharmaceutical company).
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 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 currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York and a member of the Board of The Leadership Academy (previously NYC Leadership Academy) (2012-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Vicki L. Fuller (1957)
Year of Election or Appointment: 2020
Trustee
Ms. Fuller also serves as Trustee of other Fidelity® funds. Previously, Ms. Fuller served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of two Blackstone business development companies (2020-present), as a member of the Board of Treliant, LLC (consulting, 2019-present), as a member of the Advisory Board of Ariel Alternatives, LLC (private equity, 2021-present) and as a member of the Board and Chair of the Audit Committee of Gusto, Inc. (software, 2021-present). In addition, Ms. Fuller currently serves as a member of the Board of Roosevelt University (2019-present) and as a member of the Executive Board of New York University’s Stern School of Business. Ms. Fuller previously served as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-2021).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Trustee
Ms. Kampling also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Finance Committee and Governance, Compensation and Nominating Committee of Xcel Energy Inc. (utilities company, 2020-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee and Chair of the Executive Development and Compensation Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a Member of the Advisory Board of certain Fidelity® funds (2020), a member of the Board, Compensation Committee and Executive Committee and Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-2021), a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Thomas A. Kennedy (1955)
Year of Election or Appointment: 2021
Trustee
Mr. Kennedy also serves as Trustee of other Fidelity® funds. Previously, Mr. Kennedy served as a Member of the Advisory Board of certain Fidelity® funds (2020) and held a variety of positions at Raytheon Company (aerospace and defense, 1983-2020), including Chairman and Chief Executive Officer (2014-2020) and Executive Vice President and Chief Operating Officer (2013-2014). Mr. Kennedy currently serves as Executive Chairman of the Board of Directors of Raytheon Technologies Corporation (aerospace and defense, 2020-present). He is also a member of the Rutgers School of Engineering Industry Advisory Board (2011-present) and a member of the UCLA Engineering Dean’s Executive Board (2016-present).
Oscar Munoz (1959)
Year of Election or Appointment: 2021
Trustee
Mr. Munoz also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Munoz served as Executive Chairman (2020-2021), Chief Executive Officer (2015-2020), President (2015-2016) and a member of the Board (2010-2021) of United Airlines Holdings, Inc. Mr. Munoz currently serves as a member of the Board of CBRE Group, Inc. (commercial real estate, 2020-present), a member of the Board of Univision Communications, Inc. (Hispanic media, 2020-present) and a member of the Advisory Board of Salesforce.com, Inc. (cloud-based software, 2020-present). Previously, Mr. Munoz served as a Member of the Advisory Board of certain Fidelity® funds (2021).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Lead Independent Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as a member of the Board of Fortune Brands Home and Security (home and security products, 2004-present) and as Director (2013-present) and Non-Executive Chairman of the Board (2022-present) of Interpublic Group of Companies, Inc. (marketing communication).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Trustee
Ms. Tomasky also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Executive Committee, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present) and as a member of the Board of its subsidiary company, Public Service Electric and Gas Co. (2021-present). In addition, Ms. Tomasky currently serves as a member (2009-present) and President (2020-present) of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board and Kenyon in the World Committee of Kenyon College (2016-present). Previously, Ms. Tomasky served as a Member of the Advisory Board of certain Fidelity® funds (2020), as a member of the Board of the Columbus Regional Airport Authority (2007-2020), as a member of the Board (2011-2018) and Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee of other Fidelity® funds. Previously, Mr. Wiley served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley also previously served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018), a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018) and a member of the Board of High Point Resources (exploration and production, 2005-2020).
+ 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 (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as an officer of other funds. Mr. Brown serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
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 Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as an officer of other funds. Mr. Davis serves as Assistant Treasurer of FIMM, LLC (2021-present), FMR Capital, Inc. (2017-present), FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); 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).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2017-present). Previously, Ms. Del Prato served as President and Treasurer of The North Carolina Capital Management Trust: Cash Portfolio and Term Portfolio (2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present); Secretary of FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); and Assistant Secretary of FIMM, LLC (2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); 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).
Jason P. Pogorelec (1975)
Year of Election or Appointment: 2020
Chief Compliance Officer
Mr. Pogorelec also serves as Chief Compliance Officer of other funds. Mr. Pogorelec is a senior Vice President of Asset Management Compliance for Fidelity Investments and is an employee of Fidelity Investments (2006-present). Previously, Mr. Pogorelec served as Vice President, Associate General Counsel for Fidelity Investments (2010-2020) and Assistant Secretary of certain Fidelity funds (2015-2020).
Brett Segaloff (1972)
Year of Election or Appointment: 2021
Anti-Money Laundering (AML) Officer
Mr. Segaloff also serves as an AML Officer of other funds and other related entities. He is Director, Anti-Money Laundering (2007-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments (1996-present).
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), 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 Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as an officer of other funds. Mr. Wegmann serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2011-present). Previously, Mr. Wegmann served as Assistant Treasurer of certain Fidelity® funds (2019-2021).
Shareholder Expense Example
As a shareholder, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or redemption proceeds, as applicable and (2) ongoing costs, which generally include 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 a 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, 2021 to February 28, 2022).
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 for a class/Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If any fund is a shareholder of any underlying mutual funds or exchange-traded funds (ETFs) (the Underlying Funds), such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses incurred presented in the table. These fees and expenses are not included in the 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 actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the 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. If any fund is a shareholder of any Underlying Funds, such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses as presented in the table. These fees and expenses are not included in the 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, 2021 | Ending Account Value February 28, 2022 | Expenses Paid During Period-B September 1, 2021 to February 28, 2022 | |
Banking Portfolio | .72% | |||
Actual | $1,000.00 | $1,107.30 | $3.76 | |
Hypothetical-C | $1,000.00 | $1,021.22 | $3.61 | |
Brokerage and Investment Management Portfolio | .74% | |||
Actual | $1,000.00 | $955.90 | $3.59 | |
Hypothetical-C | $1,000.00 | $1,021.12 | $3.71 | |
Financial Services Portfolio | .72% | |||
Actual | $1,000.00 | $1,036.70 | $3.64 | |
Hypothetical-C | $1,000.00 | $1,021.22 | $3.61 | |
FinTech Portfolio | .80% | |||
Actual | $1,000.00 | $803.40 | $3.58 | |
Hypothetical-C | $1,000.00 | $1,020.83 | $4.01 | |
Insurance Portfolio | .77% | |||
Actual | $1,000.00 | $1,055.00 | $3.92 | |
Hypothetical-C | $1,000.00 | $1,020.98 | $3.86 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/ 365 (to reflect the one-half year period). The fees and expenses of any Underlying Funds are not included in each annualized expense ratio.
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 | 04/11/22 | 04/08/22 | $0.092 | $0.487 |
Brokerage and Investment Management Portfolio | 04/11/22 | 04/08/22 | $0.156 | $0.405 |
Financial Services Portfolio | 04/11/22 | 04/08/22 | $0.038 | $0.586 |
FinTech Portfolio | 04/11/22 | 04/08/22 | $0.000 | $0.000 |
Insurance Portfolio | 04/11/22 | 04/08/22 | $0.000 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2022, or, if subsequently determined to be different, the net capital gain of such year.
Banking Portfolio | $25,764,504 |
Brokerage and Investment Management Portfolio | $3,333,226 |
Financial Services Portfolio | $ 56,557,809 |
FinTech Portfolio | $ 33,808,992 |
Insurance Portfolio | $ 6,075,297 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
Banking Portfolio | |
April 2021 | 100% |
December 2021 | 100% |
Brokerage and Investment Management Portfolio | |
April 2021 | – |
December 2021 | 100% |
Financial Services Portfolio | |
April 2021 | 100% |
December 2021 | 100% |
FinTech Portfolio | |
April 2021 | 99% |
December 2021 | 94% |
Insurance Portfolio | |
April 2021 | 100% |
December 2021 | 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:
Banking Portfolio | |
April 2021 | 100% |
December 2021 | 100% |
Brokerage and Investment Management Portfolio | |
April 2021 | – |
December 2021 | 100% |
Financial Services Portfolio | |
April 2021 | 100% |
December 2021 | 100% |
FinTech Portfolio | |
April 2021 | 100% |
December 2021 | 95% |
Insurance Portfolio | |
April 2021 | 100% |
December 2021 | 100% |
A percentage of the dividends distributed during the fiscal year for the following fund qualifies as a section 199A dividend:
FinTech Portfolio | |
April 2021 | 1% |
December 2021 | 6% |
The funds hereby designate the percentages noted below of the short-term capital gain dividends distributed during the fiscal year as qualifying to be taxed as short-term capital gain dividends for nonresident alien shareholders:
April, 2021 | December, 2021 | |
Banking Portfolio | – | – |
Brokerage and Investment Management Portfolio | – | – |
Financial Services Portfolio | – | 100% |
FinTech Portfolio | – | 100% |
Insurance Portfolio | – | 100% |
The funds will notify shareholders in January 2023 of amounts for use in preparing 2022 income tax returns.
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Funds have adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage each Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. Each Fund’s Board of Trustees (the Board) has designated each Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2020 through November 30, 2021. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
Proxy Voting Results
A special meeting of FinTech Portfolio's shareholders was held on October 20, 2021. The results of votes taken among shareholders on the proposal before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 2
To modify FinTech Portfolio's fundamental concentration policy.
# of Votes | % of Votes | |
Affirmative | 162,701,685.18 | 88.494 |
Against | 8,610,880.51 | 4.684 |
Abstain | 12,542,777.68 | 7.439 |
TOTAL | 183,855,343.37 | 100.000 |
SELFIN-ANN-0422
1.813663.117
Fidelity® Select Portfolios®
Health Care Sector
Biotechnology Portfolio
Health Care Portfolio
Health Care Services Portfolio
Medical Technology and Devices Portfolio
Pharmaceuticals Portfolio
February 28, 2022
![Fidelity Investments](https://capedge.com/proxy/N-CSR/0001379491-22-001658/fid_sun.jpg)
![Fidelity Investments](https://capedge.com/proxy/N-CSR/0001379491-22-001658/fipro_logo.jpg)
Contents
Biotechnology Portfolio | |
Health Care Portfolio | |
Health Care Services Portfolio | |
Medical Technology and Devices Portfolio | |
Pharmaceuticals Portfolio | |
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. © 2022 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-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT 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.
Note to Shareholders:
Early in 2020, the outbreak and spread of COVID-19 emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread. The pandemic prompted a number of measures to limit the spread of COVID-19, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. To help stem the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
In general, the overall impact of the pandemic lessened in 2021, amid a resilient economy and widespread distribution of three COVID-19 vaccines granted emergency use authorization from the U.S. Food and Drug Administration (FDA) early in the year. Still, the situation remains dynamic, and the extent and duration of its influence on financial markets and the economy is highly uncertain, due in part to a recent spike in cases based on highly contagious variants of the coronavirus.
Extreme events such as the COVID-19 crisis are exogenous shocks that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets. Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we continue to take extra steps to be responsive to customer needs. We encourage you to visit us online, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Biotechnology Portfolio | (29.49)% | 5.62% | 13.60% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Biotechnology Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789798031_740.jpg)
Period Ending Values | ||
$35,798 | Biotechnology Portfolio | |
$39,037 | S&P 500® Index |
Biotechnology Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Rajiv Kaul: For the fiscal year, the fund returned -29.49%, considerably trailing the -7.74% result of the MSCI US IMI Biotechnology 25/50 Index, as well as the broad-based S&P 500® index. Versus the industry index, security selection was the primary detractor, especially in the fund’s core biotechnology industry. Largely out-of-index exposure to pharmaceuticals and life sciences tools & services also hurt. The fund's largest individual relative detractor was our lighter-than-index stake in AbbVie, which gained roughly 44% the past year. The company was the fund's biggest holding. Also hampering performance was an underweighting in Regeneron Pharmaceuticals, which gained 37%. The company was among the largest holdings at period end. Also hurting performance was our lighter-than-index stake in Amgen, which gained 4%. We decreased our position the past 12 months. Conversely, a small out-of-index stake in health care technology contributed a bit to performance versus the industry index. Our non-index position in National Resilience, a private placement, was the fund's biggest individual relative contributor, driven by a gain of 345%. Also bolstering performance was our outsized stake in Biohaven Pharmaceutical Holding, which gained about 41%. Biohaven was among the fund's biggest holdings. Another notable relative contributor was an overweighting in Intellia Therapeutics (+61%). Notable changes in positioning include increased exposure to the pharmaceuticals subindustry.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, 2022
% of fund's net assets | |
AbbVie, Inc. | 8.3 |
Gilead Sciences, Inc. | 5.4 |
Vertex Pharmaceuticals, Inc. | 4.4 |
Alnylam Pharmaceuticals, Inc. | 4.1 |
Biohaven Pharmaceutical Holding Co. Ltd. | 2.7 |
Argenx SE ADR | 2.5 |
Krystal Biotech, Inc. | 2.4 |
Arcus Biosciences, Inc. | 2.3 |
Regeneron Pharmaceuticals, Inc. | 2.2 |
Horizon Therapeutics PLC | 1.8 |
36.1 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Biotechnology | 89.8% | |
Pharmaceuticals | 7.9% | |
Life Sciences Tools & Services | 1.0% | |
Health Care Technology | 0.2% | |
Health Care Providers & Services | 0.1% | |
All Others* | 1.0% |
* Includes short-term investments and net other assets (liabilities).
Biotechnology Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 97.6% | |||
Shares | Value | ||
Biotechnology - 88.5% | |||
Biotechnology - 88.5% | |||
4D Molecular Therapeutics, Inc. (a) | 338,568 | $4,638,382 | |
AbbVie, Inc. | 2,966,345 | 438,336,793 | |
ACADIA Pharmaceuticals, Inc. (a) | 94,500 | 2,401,245 | |
Acumen Pharmaceuticals, Inc. | 1,500 | 8,790 | |
Adagio Therapeutics, Inc. | 326,216 | 2,182,385 | |
ADC Therapeutics SA (a)(b) | 755,238 | 12,612,475 | |
Adicet Bio, Inc. (a) | 562,539 | 7,358,010 | |
Aerovate Therapeutics, Inc. | 286,251 | 2,799,535 | |
Agios Pharmaceuticals, Inc. (a) | 273,071 | 8,500,700 | |
Akouos, Inc. (a)(b) | 1,040,193 | 5,554,631 | |
Albireo Pharma, Inc. (a)(b) | 550 | 18,337 | |
Alector, Inc. (a) | 1,020,618 | 16,166,589 | |
Alkermes PLC (a) | 140,041 | 3,481,419 | |
Allena Pharmaceuticals, Inc. (a)(b) | 106,183 | 48,536 | |
Allogene Therapeutics, Inc. (a)(b) | 1,355,970 | 12,407,126 | |
Allovir, Inc. (a)(b) | 944,668 | 8,502,012 | |
Alnylam Pharmaceuticals, Inc. (a) | 1,365,139 | 215,487,191 | |
ALX Oncology Holdings, Inc. (a) | 584,088 | 10,583,675 | |
Ambrx Biopharma, Inc. ADR | 1,389,395 | 6,238,384 | |
Amgen, Inc. | 5,590 | 1,266,023 | |
Amicus Therapeutics, Inc. (a) | 1,304,101 | 10,615,382 | |
AnaptysBio, Inc. (a) | 108,856 | 3,327,728 | |
Annexon, Inc. (a)(b) | 6,336 | 30,761 | |
Apellis Pharmaceuticals, Inc. (a) | 1,182,904 | 50,308,907 | |
Applied Therapeutics, Inc. (a) | 569,640 | 1,070,923 | |
Arcturus Therapeutics Holdings, Inc. (a)(b) | 920,424 | 22,062,563 | |
Arcus Biosciences, Inc. (a)(b) | 3,193,396 | 118,794,331 | |
Arcutis Biotherapeutics, Inc. (a) | 868,174 | 15,453,497 | |
Argenx SE ADR (a) | 456,947 | 131,468,221 | |
Arrowhead Pharmaceuticals, Inc. (a) | 1,142,001 | 50,248,044 | |
Ascendis Pharma A/S sponsored ADR (a) | 659,409 | 74,110,978 | |
Atara Biotherapeutics, Inc.(a) | 684,540 | 8,796,339 | |
aTyr Pharma, Inc. (a) | 1,146,952 | 5,688,882 | |
Aura Biosciences, Inc. | 438,024 | 7,840,630 | |
Aurinia Pharmaceuticals, Inc. (a)(b) | 463,686 | 5,703,338 | |
Autolus Therapeutics PLC ADR (a)(b) | 646,285 | 2,417,106 | |
Avidity Biosciences, Inc. (a)(b) | 408,284 | 6,924,497 | |
Axcella Health, Inc. (a) | 397,149 | 750,612 | |
Beam Therapeutics, Inc. (a)(b) | 210,929 | 16,526,287 | |
BELLUS Health, Inc. (a) | 78,900 | 524,685 | |
Bicycle Therapeutics PLC ADR (a) | 567,847 | 26,972,733 | |
BioAtla, Inc. (a)(b) | 786,990 | 5,099,695 | |
BioCryst Pharmaceuticals, Inc. (a)(b) | 2,846,705 | 47,283,770 | |
Biogen, Inc. (a) | 61,016 | 12,874,986 | |
Biohaven Pharmaceutical Holding Co. Ltd. (a) | 1,178,612 | 139,913,031 | |
BioMarin Pharmaceutical, Inc. (a) | 180,575 | 14,106,519 | |
Biomea Fusion, Inc. (a)(b) | 960,229 | 6,155,068 | |
BioNTech SE ADR (a) | 60,928 | 9,188,552 | |
BioXcel Therapeutics, Inc. (a)(b) | 351,727 | 6,440,121 | |
Blueprint Medicines Corp. (a) | 818,862 | 49,582,094 | |
Bolt Biotherapeutics, Inc. | 1,398 | 4,879 | |
BridgeBio Pharma, Inc. (a)(b) | 893,742 | 6,971,188 | |
C4 Therapeutics, Inc. (a) | 579,281 | 12,993,273 | |
Candel Therapeutics, Inc. (c) | 2,085,812 | 8,593,545 | |
CareDx, Inc. (a) | 8,100 | 310,878 | |
Celldex Therapeutics, Inc. (a) | 849,200 | 25,391,080 | |
Centessa Pharmaceuticals PLC ADR (b) | 10,300 | 91,876 | |
Century Therapeutics, Inc. | 67,000 | 944,700 | |
Century Therapeutics, Inc. (d) | 767,618 | 10,823,414 | |
Cerevel Therapeutics Holdings (a)(b) | 1,098,680 | 29,082,060 | |
ChemoCentryx, Inc. (a) | 1,819,622 | 55,207,331 | |
Chinook Therapeutics, Inc. (a) | 609,781 | 7,780,806 | |
Chinook Therapeutics, Inc. rights (a)(e) | 115,821 | 5,791 | |
Codiak Biosciences, Inc. (a) | 402,539 | 1,899,984 | |
Cogent Biosciences, Inc. (a)(b) | 411,536 | 2,440,408 | |
Coherus BioSciences, Inc. (a) | 587 | 6,921 | |
Compass Pathways PLC ADR (a)(b) | 66,738 | 963,697 | |
Compass Therapeutics, Inc. (b) | 2,750,000 | 5,582,500 | |
Connect Biopharma Holdings Ltd. ADR (a) | 624,300 | 2,447,256 | |
ContraFect Corp. (a)(b) | 456,309 | 1,514,946 | |
Crinetics Pharmaceuticals, Inc. (a) | 2,123,187 | 42,506,204 | |
CRISPR Therapeutics AG (a)(b) | 205,122 | 12,588,337 | |
Cullinan Oncology, Inc. (a) | 346,540 | 4,969,384 | |
Cyclerion Therapeutics, Inc. (a) | 837,285 | 879,149 | |
Cyclerion Therapeutics, Inc. (a)(f) | 94,809 | 99,549 | |
Cyteir Therapeutics, Inc. | 810,823 | 4,702,773 | |
Cytokinetics, Inc. (a)(b) | 2,338,471 | 82,594,796 | |
Day One Biopharmaceuticals, Inc. (a)(b) | 1,270,082 | 17,349,320 | |
Decibel Therapeutics, Inc. | 4,700 | 16,450 | |
Denali Therapeutics, Inc. (a) | 680,751 | 22,165,253 | |
Design Therapeutics, Inc. (a)(b) | 1,024,935 | 13,908,368 | |
Dyne Therapeutics, Inc. (a) | 72,200 | 618,754 | |
Editas Medicine, Inc. (a) | 9,023 | 154,474 | |
Eledon Pharmaceuticals, Inc. (a) | 42,236 | 149,093 | |
Enanta Pharmaceuticals, Inc. (a) | 87,783 | 6,181,679 | |
Entrada Therapeutics, Inc. (b) | 444,218 | 5,388,364 | |
Epizyme, Inc. (a) | 1,963,135 | 2,925,071 | |
EQRx, Inc. (a)(b) | 1,143,367 | 3,452,968 | |
EQRx, Inc.: | |||
rights (a)(e) | 116,649 | 163,309 | |
rights (a)(e) | 49,993 | 51,993 | |
Equillium, Inc. (a) | 77,800 | 292,528 | |
Erasca, Inc. | 810,023 | 10,044,285 | |
Essa Pharma, Inc. (a)(b) | 371,150 | 3,032,296 | |
Evelo Biosciences, Inc. (a)(b) | 833,899 | 2,605,934 | |
Exact Sciences Corp. (a) | 73,012 | 5,699,317 | |
Exelixis, Inc. (a) | 3,178,634 | 65,257,356 | |
Fate Therapeutics, Inc. (a) | 901,787 | 31,156,741 | |
FibroGen, Inc. (a) | 431 | 6,064 | |
Foghorn Therapeutics, Inc. (a) | 631,710 | 6,070,733 | |
Forma Therapeutics Holdings, Inc. (a)(b) | 328,960 | 3,243,546 | |
Fusion Pharmaceuticals, Inc. (a) | 1,740,302 | 13,104,474 | |
G1 Therapeutics, Inc. (a)(b) | 110,139 | 1,168,575 | |
Galapagos NV sponsored ADR (a)(b) | 21,343 | 1,413,547 | |
Gamida Cell Ltd. (a) | 4,067 | 13,665 | |
Generation Bio Co. (a) | 137,100 | 701,952 | |
Genmab A/S ADR (a) | 21,490 | 719,055 | |
Geron Corp. (a)(b) | 189,606 | 206,671 | |
Geron Corp. warrants 12/31/25 (a) | 2,100,000 | 391,969 | |
Gilead Sciences, Inc. | 4,711,661 | 284,584,324 | |
Global Blood Therapeutics, Inc. (a) | 189,216 | 5,714,323 | |
Graphite Bio, Inc. | 108,200 | 995,440 | |
Graphite Bio, Inc. (d) | 1,204,453 | 11,080,968 | |
Gritstone Bio, Inc. (a) | 16,380 | 83,538 | |
Halozyme Therapeutics, Inc. (a) | 419,100 | 14,865,477 | |
Heron Therapeutics, Inc. (a)(b) | 12,925 | 91,768 | |
Homology Medicines, Inc. (a)(b) | 1,303,091 | 4,547,788 | |
Hookipa Pharma, Inc. (a)(b) | 1,006,500 | 2,415,600 | |
Horizon Therapeutics PLC (a) | 1,067,791 | 97,350,505 | |
Icosavax, Inc. (a) | 45,100 | 785,642 | |
Ideaya Biosciences, Inc. (a)(b) | 1,223,074 | 16,144,577 | |
Idorsia Ltd. (a)(b) | 1,371,271 | 27,426,732 | |
Imago BioSciences, Inc. | 450,600 | 10,611,630 | |
Immuneering Corp. | 81,704 | 610,329 | |
Immunic, Inc. (a) | 509,372 | 5,934,184 | |
Immunocore Holdings PLC ADR | 195,475 | 4,319,998 | |
ImmunoGen, Inc. (a) | 1,666,723 | 9,400,318 | |
Incyte Corp. (a) | 139,000 | 9,493,700 | |
Inhibikase Therapeutics, Inc. (a) | 433,300 | 459,298 | |
Inhibrx, Inc. (a) | 21,600 | 464,400 | |
Inozyme Pharma, Inc. (a) | 609,380 | 3,516,123 | |
Insmed, Inc. (a) | 266,820 | 6,376,998 | |
Instil Bio, Inc. (a) | 1,445,074 | 15,505,644 | |
Intellia Therapeutics, Inc. (a) | 822,701 | 81,323,994 | |
Invitae Corp. (a)(b) | 17,117 | 184,692 | |
Ionis Pharmaceuticals, Inc. (a) | 1,246,677 | 41,614,078 | |
Iovance Biotherapeutics, Inc. (a) | 793,279 | 12,430,682 | |
iTeos Therapeutics, Inc. (a) | 119,381 | 4,313,236 | |
Iveric Bio, Inc. (a) | 8,182 | 131,239 | |
Janux Therapeutics, Inc. (b) | 806,215 | 13,931,395 | |
Jounce Therapeutics, Inc. (a) | 36,434 | 271,798 | |
Karuna Therapeutics, Inc. (a) | 229,311 | 24,077,655 | |
Keros Therapeutics, Inc. (a) | 284,186 | 15,260,788 | |
Kiniksa Pharmaceuticals Ltd. (a)(b) | 192,666 | 1,972,900 | |
Kinnate Biopharma, Inc. (a)(b) | 689,759 | 5,366,325 | |
Kodiak Sciences, Inc. (a) | 35,068 | 302,988 | |
Kronos Bio, Inc. (a)(b) | 579,460 | 4,363,334 | |
Krystal Biotech, Inc. (a)(b)(c) | 1,994,658 | 126,760,516 | |
Kura Oncology, Inc. (a) | 39,909 | 633,356 | |
Kymera Therapeutics, Inc. (a) | 798,471 | 31,747,207 | |
Legend Biotech Corp. ADR (a)(b) | 861,308 | 34,099,184 | |
Lexicon Pharmaceuticals, Inc. (a)(b) | 40,868 | 84,597 | |
LogicBio Therapeutics, Inc. (a) | 315,500 | 208,230 | |
Lyell Immunopharma, Inc. (b) | 398,596 | 2,885,835 | |
Macrogenics, Inc. (a) | 426,716 | 3,989,795 | |
Madrigal Pharmaceuticals, Inc. (a)(b) | 153,140 | 14,219,049 | |
Magenta Therapeutics, Inc. (a) | 109,100 | 343,665 | |
MannKind Corp. (a)(b) | 5,300,401 | 13,887,051 | |
Merus BV (a)(b) | 630,486 | 17,710,352 | |
Minerva Neurosciences, Inc. (a) | 226,179 | 159,728 | |
Mirati Therapeutics, Inc. (a) | 555,148 | 49,014,017 | |
Moderna, Inc. (a) | 173,693 | 26,679,245 | |
Monte Rosa Therapeutics, Inc. | 260,200 | 3,731,268 | |
Monte Rosa Therapeutics, Inc. (d) | 1,433,576 | 20,557,480 | |
Morphic Holding, Inc. (a) | 805,337 | 32,100,733 | |
Morphosys AG sponsored ADR (a) | 88,402 | 604,670 | |
Myovant Sciences Ltd. (a) | 1,266 | 16,990 | |
Natera, Inc. (a) | 410,133 | 26,966,245 | |
Neurocrine Biosciences, Inc. (a) | 13,806 | 1,240,745 | |
Neximmune, Inc. | 525,000 | 1,302,000 | |
Novavax, Inc. (a)(b) | 2,976 | 248,109 | |
NuCana PLC ADR (a)(b) | 624,329 | 1,685,688 | |
Nurix Therapeutics, Inc. (a)(b) | 1,121,722 | 18,138,245 | |
Nuvalent, Inc. Class A (a)(b) | 204,174 | 3,052,401 | |
Omega Therapeutics, Inc. (a) | 79,800 | 947,226 | |
Omega Therapeutics, Inc. (d) | 1,102,941 | 13,091,910 | |
Oragenics, Inc. (a) | 155,806 | 57,898 | |
ORIC Pharmaceuticals, Inc. (a)(b) | 724,374 | 5,621,142 | |
Passage Bio, Inc. (a) | 23,862 | 79,222 | |
PMV Pharmaceuticals, Inc. (a)(b) | 502,700 | 7,962,768 | |
Poseida Therapeutics, Inc. (a) | 615,283 | 2,245,783 | |
Praxis Precision Medicines, Inc. (a) | 395,829 | 5,185,360 | |
Prelude Therapeutics, Inc. (a) | 449,056 | 3,965,164 | |
Prometheus Biosciences, Inc. (a) | 301,200 | 13,114,248 | |
Protagonist Therapeutics, Inc. (a) | 1,226,378 | 29,776,458 | |
Prothena Corp. PLC (a) | 852,589 | 29,499,579 | |
PTC Therapeutics, Inc. (a) | 2,268,744 | 79,678,289 | |
Radius Health, Inc. (a) | 1,849 | 15,384 | |
Rallybio Corp. (a)(b) | 1,196,785 | 13,152,667 | |
RAPT Therapeutics, Inc. (a) | 1,113,177 | 22,263,540 | |
Recursion Pharmaceuticals, Inc. (a)(b) | 250,300 | 2,740,785 | |
Regeneron Pharmaceuticals, Inc. (a) | 190,454 | 117,769,135 | |
REGENXBIO, Inc. (a) | 452 | 11,847 | |
Relay Therapeutics, Inc. (a)(b) | 1,511,389 | 36,439,589 | |
Reneo Pharmaceuticals, Inc. (a) | 4,000 | 19,280 | |
Repare Therapeutics, Inc. (a)(b) | 705,060 | 11,330,314 | |
Replimune Group, Inc. (a) | 1,080,217 | 17,326,681 | |
Revolution Medicines, Inc. (a)(b) | 785,492 | 14,861,509 | |
Rhythm Pharmaceuticals, Inc. (a) | 546,320 | 4,162,958 | |
Rigel Pharmaceuticals, Inc. (a) | 50,700 | 127,257 | |
Rocket Pharmaceuticals, Inc. (a)(b) | 270,436 | 4,816,465 | |
Rubius Therapeutics, Inc. (a)(b) | 595,229 | 2,970,193 | |
Sage Therapeutics, Inc. (a)(b) | 321,935 | 11,708,776 | |
Sana Biotechnology, Inc. (b) | 90,190 | 582,627 | |
Sangamo Therapeutics, Inc. (a) | 8,827 | 51,638 | |
Sarepta Therapeutics, Inc. (a) | 560,004 | 42,901,906 | |
Scholar Rock Holding Corp. (a)(b) | 1,543,247 | 26,852,498 | |
Seagen, Inc. (a) | 724,374 | 93,350,077 | |
Selecta Biosciences, Inc. (a)(b) | 1,032,715 | 1,910,523 | |
Sensorion SA (a) | 3,270,000 | 2,261,835 | |
Seres Therapeutics, Inc. (a) | 687,847 | 5,502,776 | |
Shattuck Labs, Inc. (a) | 110,936 | 554,680 | |
Sierra Oncology, Inc. (a)(b) | 52,000 | 1,607,320 | |
Silverback Therapeutics, Inc. (a) | 90,166 | 387,714 | |
Solid Biosciences, Inc. (a) | 35,500 | 28,918 | |
Springworks Therapeutics, Inc. (a)(b) | 428,614 | 24,255,266 | |
Stoke Therapeutics, Inc. (a) | 270,036 | 5,265,702 | |
Surface Oncology, Inc. (a)(b) | 566,245 | 2,038,482 | |
Sutro Biopharma, Inc. (a) | 737,300 | 6,576,716 | |
Syndax Pharmaceuticals, Inc. (a) | 187,300 | 2,920,007 | |
Syros Pharmaceuticals, Inc. (a) | 1,574,634 | 2,031,278 | |
Syros Pharmaceuticals, Inc. warrants 10/10/22 (a) | 21,625 | 0 | |
Talaris Therapeutics, Inc. (a) | 200 | 1,402 | |
Tango Therapeutics, Inc. (a) | 1,409,488 | 12,910,910 | |
Taysha Gene Therapies, Inc. (a)(b) | 882,847 | 5,623,735 | |
Tenaya Therapeutics, Inc. (a) | 1,464,863 | 17,080,303 | |
TG Therapeutics, Inc. (a) | 2,842,420 | 28,054,685 | |
Travere Therapeutics, Inc. (a) | 372,928 | 10,166,017 | |
Turning Point Therapeutics, Inc. (a) | 451,601 | 14,297,688 | |
Twist Bioscience Corp. (a) | 685,032 | 38,320,690 | |
Tyra Biosciences, Inc. (b) | 699,901 | 8,293,827 | |
Ultragenyx Pharmaceutical, Inc. (a) | 1,113,318 | 74,948,568 | |
uniQure B.V. (a) | 643,408 | 10,931,502 | |
United Therapeutics Corp. (a) | 423,409 | 70,370,576 | |
Vaxcyte, Inc. (a) | 580,989 | 13,461,515 | |
Vera Therapeutics, Inc. (a) | 779,768 | 18,098,415 | |
Veracyte, Inc. (a) | 8,000 | 222,400 | |
Verastem, Inc. (a) | 11,900 | 14,280 | |
Vertex Pharmaceuticals, Inc. (a) | 1,003,175 | 230,750,314 | |
Verve Therapeutics, Inc. | 427,467 | 13,956,798 | |
Vor Biopharma, Inc. (a)(b) | 696,659 | 6,290,831 | |
Werewolf Therapeutics, Inc. (a) | 471,702 | 3,377,386 | |
X4 Pharmaceuticals, Inc. (a) | 5,731 | 8,597 | |
X4 Pharmaceuticals, Inc. warrants 4/12/24 (a) | 450,000 | 639 | |
Xencor, Inc. (a) | 696,343 | 21,802,499 | |
Xenon Pharmaceuticals, Inc. (a) | 819,269 | 25,970,827 | |
Xilio Therapeutics, Inc. | 623,774 | 7,348,058 | |
Y-mAbs Therapeutics, Inc. (a) | 1,969,051 | 17,938,055 | |
Yumanity Therapeutics, Inc. (a) | 260,182 | 296,607 | |
Zealand Pharma A/S (a) | 20,944 | 321,220 | |
Zentalis Pharmaceuticals, Inc. (a) | 638,433 | 31,851,422 | |
Zymeworks, Inc. (a) | 271,495 | 1,965,624 | |
4,673,010,636 | |||
Diversified Financial Services - 0.1% | |||
Other Diversified Financial Services - 0.1% | |||
Healthcare Capital Corp. Class A (a)(b) | 285,400 | 3,113,714 | |
Food & Staples Retailing - 0.0% | |||
Drug Retail - 0.0% | |||
MedAvail Holdings, Inc. (a) | 2,777 | 3,332 | |
Health Care Equipment & Supplies - 0.0% | |||
Health Care Equipment - 0.0% | |||
Novocure Ltd. (a) | 4,713 | 385,806 | |
Health Care Supplies - 0.0% | |||
Pulmonx Corp. (a) | 8,300 | 217,958 | |
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 603,764 | ||
Health Care Providers & Services - 0.0% | |||
Health Care Services - 0.0% | |||
Guardant Health, Inc. (a) | 21,600 | 1,431,432 | |
Precipio, Inc. (a)(f) | 525 | 803 | |
1,432,235 | |||
Health Care Technology - 0.2% | |||
Health Care Technology - 0.2% | |||
Schrodinger, Inc. (a) | 367,727 | 12,782,191 | |
Life Sciences Tools & Services - 1.0% | |||
Life Sciences Tools & Services - 1.0% | |||
10X Genomics, Inc. (a) | 47,919 | 3,903,961 | |
23andMe Holding Co. Class B (d) | 3,206,519 | 14,333,140 | |
Absci Corp. (b) | 787,676 | 7,380,524 | |
Absci Corp. (d) | 210,224 | 1,969,799 | |
Compugen Ltd. (a)(b) | 3,288 | 10,160 | |
Evotec OAI AG (a) | 238,100 | 7,011,706 | |
Maravai LifeSciences Holdings, Inc. (a) | 107,700 | 4,207,839 | |
Olink Holding AB ADR (a) | 57,100 | 975,839 | |
Pacific Biosciences of California, Inc. (a)(b) | 528,612 | 6,301,055 | |
Seer, Inc. (a)(b) | 304,058 | 4,658,169 | |
50,752,192 | |||
Pharmaceuticals - 7.8% | |||
Pharmaceuticals - 7.8% | |||
AcelRx Pharmaceuticals, Inc. (a) | 1,313,000 | 592,820 | |
Aclaris Therapeutics, Inc. (a) | 607,789 | 9,056,056 | |
Adimab LLC (a)(e)(f)(g) | 1,954,526 | 82,656,123 | |
Afferent Pharmaceuticals, Inc. rights 12/31/24 (a)(e) | 8,274,568 | 7,778,094 | |
Amylyx Pharmaceuticals, Inc. (b) | 171,974 | 5,657,945 | |
Antengene Corp. (a)(d) | 918,171 | 688,517 | |
Aradigm Corp. (a)(e) | 148,009 | 6,808 | |
Aradigm Corp. (a)(e) | 11,945 | 549 | |
Arvinas Holding Co. LLC (a) | 1,201,919 | 77,896,370 | |
Atea Pharmaceuticals, Inc. (a) | 66,800 | 423,512 | |
Axsome Therapeutics, Inc. (a)(b) | 151,509 | 4,258,918 | |
Chiasma, Inc. warrants 12/16/24 (a)(e) | 382,683 | 4 | |
CinCor Pharma, Inc. (b) | 40,240 | 897,754 | |
Corcept Therapeutics, Inc. (a) | 859 | 19,147 | |
DICE Therapeutics, Inc. | 30,000 | 554,700 | |
Edgewise Therapeutics, Inc. (a) | 724,054 | 8,536,597 | |
Eyepoint Pharmaceuticals, Inc. (a)(b) | 227,100 | 2,259,645 | |
Fulcrum Therapeutics, Inc. (a) | 1,144,976 | 12,594,736 | |
GH Research PLC (b) | 1,388,224 | 22,905,696 | |
Harmony Biosciences Holdings, Inc. (a) | 30,600 | 1,222,776 | |
Ikena Oncology, Inc. (a) | 887,747 | 5,424,134 | |
IMARA, Inc. (a) | 413,291 | 628,202 | |
Intra-Cellular Therapies, Inc. (a) | 836,076 | 46,385,496 | |
Kaleido Biosciences, Inc. (a)(b) | 249,460 | 371,695 | |
Longboard Pharmaceuticals, Inc. (a) | 371,100 | 1,703,349 | |
Marinus Pharmaceuticals, Inc. (a) | 311,965 | 2,439,566 | |
Nektar Therapeutics (a) | 302,231 | 3,094,845 | |
NGM Biopharmaceuticals, Inc. (a) | 183,700 | 2,729,782 | |
Nuvation Bio, Inc. (a)(b) | 483,691 | 2,447,476 | |
Nuvation Bio, Inc. (f) | 1,000,000 | 5,060,000 | |
OptiNose, Inc. (a)(b) | 702,319 | 2,057,795 | |
Pharvaris BV | 551,507 | 9,430,770 | |
Pliant Therapeutics, Inc. (a) | 971,031 | 8,710,148 | |
Rain Therapeutics, Inc. (a) | 373,047 | 2,230,821 | |
Reata Pharmaceuticals, Inc. (a) | 73,596 | 2,409,533 | |
Roivant Sciences Ltd. (f) | 2,500,000 | 15,725,000 | |
Royalty Pharma PLC | 442,620 | 17,377,261 | |
Terns Pharmaceuticals, Inc. | 689,509 | 2,289,170 | |
Theseus Pharmaceuticals, Inc. | 1,645,528 | 16,619,833 | |
UCB SA | 163,077 | 17,797,710 | |
Ventyx Biosciences, Inc. (b) | 428,272 | 5,006,500 | |
Verrica Pharmaceuticals, Inc. (a)(b) | 645,496 | 5,409,256 | |
413,355,109 | |||
TOTAL COMMON STOCKS | |||
(Cost $4,606,013,311) | 5,155,053,173 | ||
Convertible Preferred Stocks - 1.5% | |||
Biotechnology - 1.3% | |||
Biotechnology - 1.3% | |||
ElevateBio LLC Series C (e)(f) | 216,600 | 784,309 | |
Korro Bio, Inc.: | |||
Series B1 (e)(f) | 957,854 | 2,030,650 | |
Series B2 (e)(f) | 899,280 | 1,906,474 | |
National Resilience, Inc. Series B (a)(e)(f) | 732,064 | 44,509,491 | |
SalioGen Therapeutics, Inc. Series B (e)(f) | 94,461 | 7,790,199 | |
ValenzaBio, Inc. Series A (e)(f) | 1,685,311 | 10,887,109 | |
67,908,232 | |||
Health Care Providers & Services - 0.1% | |||
Health Care Services - 0.1% | |||
Scorpion Therapeutics, Inc. Series B (a)(e)(f) | 3,099,905 | 4,308,868 | |
Pharmaceuticals - 0.1% | |||
Pharmaceuticals - 0.1% | |||
Afferent Pharmaceuticals, Inc. Series C (a)(e)(f) | 8,274,568 | 83 | |
Aristea Therapeutics, Inc. Series B (a)(e)(f) | 836,400 | 7,853,796 | |
7,853,879 | |||
TOTAL CONVERTIBLE PREFERRED STOCKS | |||
(Cost $53,020,299) | 80,070,979 | ||
Money Market Funds - 10.2% | |||
Fidelity Cash Central Fund 0.07% (h) | 42,438,268 | 42,446,755 | |
Fidelity Securities Lending Cash Central Fund 0.07% (h)(i) | 492,060,055 | 492,109,261 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $534,519,117) | 534,556,016 | ||
TOTAL INVESTMENT IN SECURITIES - 109.3% | |||
(Cost $5,193,552,727) | 5,769,680,168 | ||
NET OTHER ASSETS (LIABILITIES) - (9.3)% | (488,988,201) | ||
NET ASSETS - 100% | $5,280,691,967 |
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 $72,545,228 or 1.4% of net assets.
(e) Level 3 security
(f) Restricted securities (including private placements) - 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 $183,612,454 or 3.5% of net assets.
(g) Investment is owned by a wholly-owned subsidiary (Subsidiary) that is treated as a corporation for U.S. tax purposes.
(h) 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.
(i) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
Security | Acquisition Date | Acquisition Cost |
Adimab LLC | 9/17/14 - 6/5/15 | $31,091,029 |
Afferent Pharmaceuticals, Inc. Series C | 7/1/15 | $0 |
Aristea Therapeutics, Inc. Series B | 10/6/20 | $4,611,659 |
Cyclerion Therapeutics, Inc. | 4/2/19 | $1,404,026 |
ElevateBio LLC Series C | 3/9/21 | $908,637 |
Korro Bio, Inc. Series B1 | 12/17/21 | $2,499,999 |
Korro Bio, Inc. Series B2 | 12/17/21 | $2,499,998 |
National Resilience, Inc. Series B | 12/1/20 | $9,999,994 |
Nuvation Bio, Inc. | 2/10/21 | $10,000,000 |
Precipio, Inc. | 2/3/12 | $2,828,200 |
Roivant Sciences Ltd. | 5/1/21 | $25,000,000 |
SalioGen Therapeutics, Inc. Series B | 12/10/21 | $10,000,019 |
Scorpion Therapeutics, Inc. Series B | 1/8/21 | $7,500,000 |
ValenzaBio, Inc. Series A | 3/25/21 | $14,999,993 |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $49,640,258 | $1,143,119,059 | $1,150,312,562 | $22,941 | $-- | $-- | $42,446,755 | 0.1% |
Fidelity Securities Lending Cash Central Fund 0.07% | 509,290,976 | 2,170,491,481 | 2,187,673,195 | 3,110,524 | 458 | (459) | 492,109,261 | 1.3% |
Total | $558,931,234 | $3,313,610,540 | $3,337,985,757 | $3,133,465 | $458 | $(459) | $534,556,016 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
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 | Realized Gain (loss) | Change in Unrealized appreciation (depreciation) | Value, end of period |
Candel Therapeutics, Inc. | $-- | $20,000,000 | $3,172,082 | $-- | $(141,422) | $(8,092,951) | $8,593,545 |
Crinetics Pharmaceuticals, Inc. | 32,463,529 | -- | -- | -- | -- | 10,042,675 | -- |
Eledon Pharmaceuticals, Inc. | 16,136,064 | -- | 4,305,138 | -- | (4,315,899) | (7,365,934) | -- |
Hookipa Pharma, Inc. | 19,760,960 | -- | 8,573,184 | -- | 1,097,627 | (9,869,803) | -- |
Krystal Biotech, Inc. | 105,862,254 | 46,432,915 | -- | -- | -- | (25,534,653) | 126,760,516 |
Total | $174,222,807 | $66,432,915 | $16,050,404 | $-- | $(3,359,694) | $(40,820,666) | $135,354,061 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $5,155,053,173 | $5,009,178,691 | $55,211,811 | $90,662,671 |
Convertible Preferred Stocks | 80,070,979 | -- | -- | 80,070,979 |
Money Market Funds | 534,556,016 | 534,556,016 | -- | -- |
Total Investments in Securities: | $5,769,680,168 | $5,543,734,707 | $55,211,811 | $170,733,650 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:
Investments in Securities: | |
Common Stocks | |
Beginning Balance | $112,766,192 |
Total Realized Gain (Loss) | (2,418,210) |
Total Unrealized Gain (Loss) | (20,492,444) |
Cost of Purchases | 3,430 |
Proceeds of Sales | -- |
Amortization/Accretion | -- |
Transfers in to Level 3 | 803,703 |
Transfers out of Level 3 | -- |
Ending Balance | $90,662,671 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2022 | $(22,910,646) |
Convertible Preferred Stocks | |
Beginning Balance | $92,480,149 |
Total Realized Gain (Loss) | (468,770) |
Total Unrealized Gain (Loss) | 26,100,581 |
Cost of Purchases | 30,908,646 |
Proceeds of Sales | -- |
Amortization/Accretion | -- |
Transfers in to Level 3 | -- |
Transfers out of Level 3 | (68,949,627) |
Ending Balance | $80,070,979 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2022 | $25,631,811 |
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. Cost of purchases and proceeds of sales may include securities received and/or delivered through in-kind transactions. 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.
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 | 90.0% |
Netherlands | 3.0% |
Ireland | 2.9% |
Denmark | 1.4% |
Others (Individually Less Than 1%) | 2.7% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Biotechnology Portfolio
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $478,495,196) — See accompanying schedule: Unaffiliated issuers (cost $4,562,055,734) | $5,099,770,091 | |
Fidelity Central Funds (cost $534,519,117) | 534,556,016 | |
Other affiliated issuers (cost $96,977,876) | 135,354,061 | |
Total Investment in Securities (cost $5,193,552,727) | $5,769,680,168 | |
Cash | 6,522 | |
Receivable for investments sold | 47,872,221 | |
Receivable for fund shares sold | 1,117,554 | |
Dividends receivable | 242,901 | |
Distributions receivable from Fidelity Central Funds | 327,003 | |
Prepaid expenses | 38,581 | |
Other receivables | 1,267,867 | |
Total assets | 5,820,552,817 | |
Liabilities | ||
Payable for investments purchased | $39,226,393 | |
Payable for fund shares redeemed | 4,165,108 | |
Accrued management fee | 2,375,034 | |
Other affiliated payables | 821,618 | |
Other payables and accrued expenses | 1,324,504 | |
Collateral on securities loaned | 491,948,193 | |
Total liabilities | 539,860,850 | |
Net Assets | $5,280,691,967 | |
Net Assets consist of: | ||
Paid in capital | $4,847,060,233 | |
Total accumulated earnings (loss) | 433,631,734 | |
Net Assets | $5,280,691,967 | |
Net Asset Value, offering price and redemption price per share ($5,280,691,967 ÷ 334,554,396 shares) | $15.78 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $37,790,594 | |
Income from Fidelity Central Funds (including $3,110,524 from security lending) | 3,133,465 | |
Total income | 40,924,059 | |
Expenses | ||
Management fee | $38,907,750 | |
Transfer agent fees | 10,661,879 | |
Accounting fees | 1,180,004 | |
Custodian fees and expenses | 183,782 | |
Independent trustees' fees and expenses | 28,503 | |
Registration fees | 71,582 | |
Audit | 110,536 | |
Legal | 10,843 | |
Miscellaneous | 47,197 | |
Total expenses before reductions | 51,202,076 | |
Expense reductions | (172,555) | |
Total expenses after reductions | 51,029,521 | |
Net investment income (loss) | (10,105,462) | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 291,395,554 | |
Fidelity Central Funds | 458 | |
Other affiliated issuers | (3,359,694) | |
Foreign currency transactions | (19,456) | |
Total net realized gain (loss) | 288,016,862 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | (2,598,896,410) | |
Fidelity Central Funds | (459) | |
Other affiliated issuers | (40,820,666) | |
Assets and liabilities in foreign currencies | (6,759) | |
Total change in net unrealized appreciation (depreciation) | (2,639,724,294) | |
Net gain (loss) | (2,351,707,432) | |
Net increase (decrease) in net assets resulting from operations | $(2,361,812,894) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(10,105,462) | $(1,969,781) |
Net realized gain (loss) | 288,016,862 | 1,876,348,651 |
Change in net unrealized appreciation (depreciation) | (2,639,724,294) | 1,046,772,045 |
Net increase (decrease) in net assets resulting from operations | (2,361,812,894) | 2,921,150,915 |
Distributions to shareholders | (951,630,731) | (1,503,254,696) |
Share transactions | ||
Proceeds from sales of shares | 514,676,797 | 1,129,372,944 |
Reinvestment of distributions | 898,472,847 | 1,417,160,740 |
Cost of shares redeemed | (1,692,638,148) | (1,715,557,877) |
Net increase (decrease) in net assets resulting from share transactions | (279,488,504) | 830,975,807 |
Total increase (decrease) in net assets | (3,592,932,129) | 2,248,872,026 |
Net Assets | ||
Beginning of period | 8,873,624,096 | 6,624,752,070 |
End of period | $5,280,691,967 | $8,873,624,096 |
Other Information | ||
Shares | ||
Sold | 24,447,337 | 47,593,369 |
Issued in reinvestment of distributions | 43,520,026 | 59,356,167 |
Redeemed | (81,104,304) | (74,376,813) |
Net increase (decrease) | (13,136,941) | 32,572,723 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Biotechnology Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B | 2018 B |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $25.52 | $21.02 | $21.14 | $23.45 | $20.32 |
Income from Investment Operations | |||||
Net investment income (loss)C,D | (.03) | (.01) | .05 | (.04) | (.05) |
Net realized and unrealized gain (loss) | (6.91) | 9.41 | 1.79 | (.29)E | 3.49 |
Total from investment operations | (6.94) | 9.40 | 1.84 | (.33) | 3.44 |
Distributions from net investment income | (.03) | (.07) | (.03) | – | – |
Distributions from net realized gain | (2.77) | (4.84) | (1.93) | (1.98) | (.31) |
Total distributions | (2.80) | (4.90)F | (1.96) | (1.98) | (.31) |
Net asset value, end of period | $15.78 | $25.52 | $21.02 | $21.14 | $23.45 |
Total ReturnG | (29.49)% | 47.35% | 8.57% | (.46)%E | 17.04% |
Ratios to Average Net AssetsD,H,I | |||||
Expenses before reductions | .69% | .70% | .72% | .72% | .74% |
Expenses net of fee waivers, if any | .69% | .70% | .72% | .72% | .74% |
Expenses net of all reductions | .69% | .69% | .72% | .72% | .73% |
Net investment income (loss) | (.14)% | (.03)% | .22% | (.20)% | (.25)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $5,280,692 | $8,873,624 | $6,624,752 | $7,583,722 | $8,940,767 |
Portfolio turnover rateJ | 46% | 78% | 50% | 37% | 26% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on August 10, 2018.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
E Net realized and unrealized gain (loss) per share reflects proceeds received from litigation which amounted to $.01 per share. Excluding these litigation proceeds, the total return would have been (.53) %.
F Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Health Care Portfolio | (3.67)% | 13.49% | 16.73% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Health Care Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789797161_740.jpg)
Period Ending Values | ||
$46,966 | Health Care Portfolio | |
$39,037 | S&P 500® Index |
Health Care Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Eddie Yoon: For the fiscal year ending February 28, 2022, the fund returned -3.67%, underperforming the 9.59% gain of the MSCI U.S. IMI Health Care 25/50 Index, as well as the broad-based S&P 500® index. Versus the sector index, security selection was the primary detractor, especially in the biotechnology industry. We also had weak relatively stock performance in health care services and managed health care. Not owning Pfizer, an index component that gained 45%, was the largest individual relative detractor. Our second-largest relative detractor this period was avoiding AbbVie, an index component that gained roughly 44%. Another notable relative detractor was an outsized stake in TG Therapeutics (-78%). Conversely, the biggest contributor to performance versus the sector index was an overweighting in the outperforming managed health care industry. Also bolstering the fund's relative performance was an underweighting in health care supplies and health care equipment. The biggest individual relative contributor was an overweight position in UnitedHealth Group (+45%), the fund's largest holding. Also helping performance was our overweighting in Centene, which gained 41%. Centene was among our biggest holdings. Avoiding Medtronic, an index component that returned roughly -8%, also aided the fund's relative performance. Notable changes in positioning include increased exposure to the life sciences tools & services subindustry and a lower allocation to health care 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.
Health Care Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
UnitedHealth Group, Inc. | 10.7 |
Boston Scientific Corp. | 5.9 |
Danaher Corp. | 5.6 |
Eli Lilly & Co. | 4.9 |
Humana, Inc. | 4.8 |
Thermo Fisher Scientific, Inc. | 4.2 |
Centene Corp. | 3.1 |
Insulet Corp. | 3.0 |
Penumbra, Inc. | 2.9 |
Cigna Corp. | 2.8 |
47.9 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Health Care Providers & Services | 26.7% | |
Biotechnology | 20.4% | |
Life Sciences Tools & Services | 18.2% | |
Health Care Equipment & Supplies | 17.8% | |
Pharmaceuticals | 12.9% | |
All Others* | 4.0% |
* Includes short-term investments and net other assets (liabilities).
Health Care Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 98.0% | |||
Shares | Value | ||
Biotechnology - 19.8% | |||
Biotechnology - 19.8% | |||
ADC Therapeutics SA (a)(b) | 973,775 | $16,262,043 | |
Agios Pharmaceuticals, Inc. (a) | 700,000 | 21,791,000 | |
Alnylam Pharmaceuticals, Inc. (a) | 800,000 | 126,280,000 | |
Ambrx Biopharma, Inc. ADR | 360,000 | 1,616,400 | |
Arcutis Biotherapeutics, Inc. (a) | 637,421 | 11,346,094 | |
Argenx SE ADR (a) | 752,700 | 216,559,317 | |
Ascendis Pharma A/S sponsored ADR (a) | 954,412 | 107,266,365 | |
Atara Biotherapeutics, Inc. (a) | 1,650,000 | 21,202,500 | |
Avid Bioservices, Inc. (a) | 1,200,000 | 24,576,000 | |
Beam Therapeutics, Inc. (a)(b) | 350,000 | 27,422,500 | |
BeiGene Ltd. ADR (a) | 120,000 | 25,262,400 | |
BioAtla, Inc. (a) | 280,000 | 1,814,400 | |
BioNTech SE ADR (a) | 265,000 | 39,964,650 | |
Blueprint Medicines Corp. (a) | 460,000 | 27,853,000 | |
Celldex Therapeutics, Inc. (a) | 637,400 | 19,058,260 | |
Century Therapeutics, Inc. (b) | 815,000 | 11,491,500 | |
Cerevel Therapeutics Holdings (a) | 1,264,694 | 33,476,450 | |
Cytokinetics, Inc. (a) | 1,470,215 | 51,927,994 | |
Denali Therapeutics, Inc. (a) | 650,000 | 21,164,000 | |
Erasca, Inc. (b) | 2,500,000 | 31,000,000 | |
Exelixis, Inc. (a) | 1,500,000 | 30,795,000 | |
Fate Therapeutics, Inc. (a) | 400,000 | 13,820,000 | |
Forma Therapeutics Holdings, Inc. (a) | 500,000 | 4,930,000 | |
Generation Bio Co. (a)(b) | 508,553 | 2,603,791 | |
Graphite Bio, Inc. | 800,000 | 7,360,000 | |
Imago BioSciences, Inc. | 200,000 | 4,710,000 | |
Innovent Biologics, Inc. (a)(c) | 7,800,000 | 34,884,703 | |
Instil Bio, Inc. (a)(b) | 1,500,000 | 16,095,000 | |
Intellia Therapeutics, Inc. (a) | 420,000 | 41,517,000 | |
Janux Therapeutics, Inc. (b) | 500,000 | 8,640,000 | |
Keros Therapeutics, Inc. (a) | 460,000 | 24,702,000 | |
Kymera Therapeutics, Inc. (a) | 420,000 | 16,699,200 | |
Legend Biotech Corp. ADR (a) | 25,631 | 1,014,731 | |
Mirati Therapeutics, Inc. (a) | 316,753 | 27,966,122 | |
Morphic Holding, Inc. (a) | 305,300 | 12,169,258 | |
Nuvalent, Inc. Class A (a)(b) | 350,730 | 5,243,414 | |
ORIC Pharmaceuticals, Inc. (a) | 750,000 | 5,820,000 | |
Passage Bio, Inc. (a) | 7,112 | 23,612 | |
Poseida Therapeutics, Inc. (a) | 1,653,603 | 6,035,651 | |
Prelude Therapeutics, Inc. (a) | 930,000 | 8,211,900 | |
PTC Therapeutics, Inc. (a) | 1,150,000 | 40,388,000 | |
Regeneron Pharmaceuticals, Inc. (a) | 321,000 | 198,493,560 | |
Relay Therapeutics, Inc. (a) | 1,503,429 | 36,247,673 | |
Repare Therapeutics, Inc. (a) | 500,000 | 8,035,000 | |
Revolution Medicines, Inc. (a) | 900,000 | 17,028,000 | |
Sarepta Therapeutics, Inc. (a) | 700,000 | 53,627,000 | |
Scholar Rock Holding Corp. (a)(b) | 153,715 | 2,674,641 | |
Shattuck Labs, Inc. (a) | 1,150,000 | 5,750,000 | |
Stoke Therapeutics, Inc. (a) | 500,000 | 9,750,000 | |
TG Therapeutics, Inc. (a) | 3,040,570 | 30,010,426 | |
Twist Bioscience Corp. (a) | 520,000 | 29,088,800 | |
uniQure B.V. (a) | 670,000 | 11,383,300 | |
Vaxcyte, Inc. (a) | 790,856 | 18,324,134 | |
Vertex Pharmaceuticals, Inc. (a) | 285,000 | 65,555,700 | |
Verve Therapeutics, Inc. | 280,000 | 9,142,000 | |
Xencor, Inc. (a) | 1,280,000 | 40,076,800 | |
Xenon Pharmaceuticals, Inc. (a) | 215,973 | 6,846,344 | |
Zai Lab Ltd. (a) | 500,000 | 26,625,199 | |
Zentalis Pharmaceuticals, Inc. (a) | 1,200,000 | 59,868,000 | |
1,779,490,832 | |||
Health Care Equipment & Supplies - 17.8% | |||
Health Care Equipment - 17.8% | |||
Boston Scientific Corp. (a) | 12,000,000 | 530,040,000 | |
DexCom, Inc. (a) | 100,000 | 41,391,000 | |
Envista Holdings Corp. (a) | 2,180,000 | 104,640,000 | |
Hologic, Inc. (a) | 860,000 | 61,206,200 | |
Insulet Corp. (a) | 1,031,700 | 273,080,673 | |
Intuitive Surgical, Inc. (a) | 180,000 | 52,259,400 | |
Masimo Corp. (a) | 400,000 | 62,980,000 | |
Novocure Ltd. (a) | 163,560 | 13,389,022 | |
Outset Medical, Inc. (a)(b) | 1,080,000 | 47,487,600 | |
Penumbra, Inc. (a) | 1,189,500 | 263,759,730 | |
PROCEPT BioRobotics Corp. (b) | 500,000 | 12,490,000 | |
ResMed, Inc. | 242,200 | 59,762,850 | |
Tandem Diabetes Care, Inc. (a) | 690,000 | 77,714,700 | |
1,600,201,175 | |||
Health Care Providers & Services - 26.7% | |||
Health Care Facilities - 2.4% | |||
Cano Health, Inc. (a)(b) | 5,123,300 | 24,950,471 | |
HCA Holdings, Inc. | 200,000 | 50,062,000 | |
Rede D'Oregon Sao Luiz SA (c) | 5,000,000 | 49,498,224 | |
Surgery Partners, Inc. (a) | 1,446,505 | 75,608,816 | |
The Oncology Institute, Inc. (d) | 2,232,581 | 11,988,960 | |
212,108,471 | |||
Health Care Services - 5.4% | |||
1Life Healthcare, Inc. (a) | 1,600,000 | 17,296,000 | |
agilon health, Inc. (a)(b) | 4,000,000 | 80,880,000 | |
Cigna Corp. | 1,080,000 | 256,802,400 | |
Guardant Health, Inc. (a) | 420,200 | 27,846,654 | |
LifeStance Health Group, Inc. | 3,200,000 | 30,176,000 | |
Oak Street Health, Inc. (a)(b) | 4,400,000 | 77,044,000 | |
490,045,054 | |||
Managed Health Care - 18.9% | |||
Alignment Healthcare, Inc. (a)(b) | 3,732,794 | 31,504,781 | |
Centene Corp. (a) | 3,350,000 | 276,777,000 | |
Humana, Inc. | 1,000,000 | 434,320,000 | |
UnitedHealth Group, Inc. | 2,020,000 | 961,257,398 | |
1,703,859,179 | |||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 2,406,012,704 | ||
Health Care Technology - 1.8% | |||
Health Care Technology - 1.8% | |||
Definitive Healthcare Corp. (b) | 500,000 | 11,560,000 | |
Doximity, Inc. (b) | 570,000 | 34,969,500 | |
Health Catalyst, Inc. (a) | 805,286 | 21,839,356 | |
Inspire Medical Systems, Inc. (a) | 300,000 | 73,218,000 | |
Medlive Technology Co. Ltd. (c) | 3,000,000 | 4,430,169 | |
Phreesia, Inc. (a) | 600,000 | 18,474,000 | |
164,491,025 | |||
Life Sciences Tools & Services - 18.2% | |||
Life Sciences Tools & Services - 18.2% | |||
10X Genomics, Inc. Class B (a)(c) | 500,000 | 40,735,000 | |
Avantor, Inc. (a) | 1,800,000 | 62,442,000 | |
Bio-Rad Laboratories, Inc. Class A (a) | 140,000 | 87,634,400 | |
Bruker Corp. | 1,650,000 | 116,110,500 | |
Charles River Laboratories International, Inc. (a) | 340,000 | 98,994,400 | |
Danaher Corp. | 1,840,000 | 504,914,400 | |
Lonza Group AG | 175,000 | 121,082,906 | |
Maravai LifeSciences Holdings, Inc. (a) | 1,480,000 | 57,823,600 | |
Olink Holding AB ADR (a) | 1,200,000 | 20,508,000 | |
Sartorius Stedim Biotech | 76,299 | 29,258,436 | |
Seer, Inc. (a) | 450,458 | 6,901,017 | |
Stevanato Group SpA | 1,080,000 | 17,334,000 | |
Thermo Fisher Scientific, Inc. | 700,000 | 380,800,000 | |
West Pharmaceutical Services, Inc. | 230,000 | 89,028,400 | |
1,633,567,059 | |||
Personal Products - 0.6% | |||
Personal Products - 0.6% | |||
The Beauty Health Co. (a) | 781,205 | 15,139,753 | |
The Beauty Health Co. (d) | 1,800,000 | 34,884,000 | |
50,023,753 | |||
Pharmaceuticals - 12.8% | |||
Pharmaceuticals - 12.8% | |||
Arvinas Holding Co. LLC (a) | 800,000 | 51,848,000 | |
AstraZeneca PLC (United Kingdom) | 1,200,000 | 145,855,625 | |
Bristol-Myers Squibb Co. | 2,280,000 | 156,567,600 | |
Eli Lilly & Co. | 1,780,000 | 444,911,000 | |
Nektar Therapeutics (a) | 900,000 | 9,216,000 | |
Pharvaris BV | 598,962 | 10,242,250 | |
Pliant Therapeutics, Inc. (a) | 985,251 | 8,837,701 | |
Roche Holding AG (participation certificate) | 360,000 | 136,344,105 | |
Royalty Pharma PLC | 4,048,318 | 158,936,965 | |
Theseus Pharmaceuticals, Inc. | 600,000 | 6,060,000 | |
UCB SA | 240,000 | 26,192,844 | |
1,155,012,090 | |||
Specialty Retail - 0.3% | |||
Specialty Stores - 0.3% | |||
Warby Parker, Inc. (a)(b) | 950,000 | 28,433,500 | |
TOTAL COMMON STOCKS | |||
(Cost $6,190,163,030) | 8,817,232,138 | ||
Preferred Stocks - 1.1% | |||
Convertible Preferred Stocks - 1.0% | |||
Biotechnology - 0.6% | |||
Biotechnology - 0.6% | |||
Asimov, Inc. Series B (d)(e) | 101,438 | 9,401,345 | |
Caris Life Sciences, Inc. Series D (d)(e) | 3,206,021 | 21,352,100 | |
Element Biosciences, Inc. Series C (d)(e) | 572,265 | 9,419,482 | |
ElevateBio LLC Series C (d)(e) | 254,900 | 922,993 | |
Inscripta, Inc. Series E (d)(e) | 1,282,228 | 9,373,087 | |
50,469,007 | |||
Health Care Providers & Services - 0.0% | |||
Health Care Services - 0.0% | |||
dMed Biopharmaceutical Co. Ltd. Series C (a)(d)(e) | 380,451 | 3,774,074 | |
Health Care Technology - 0.3% | |||
Health Care Technology - 0.3% | |||
Aledade, Inc. Series B1 (d)(e) | 201,220 | 6,797,212 | |
Omada Health, Inc. Series E (d)(e) | 2,153,073 | 12,908,103 | |
Wugen, Inc. Series B (d)(e) | 454,342 | 2,580,663 | |
22,285,978 | |||
Pharmaceuticals - 0.1% | |||
Pharmaceuticals - 0.1% | |||
Aristea Therapeutics, Inc. Series B (a)(d)(e) | 1,037,400 | 9,741,186 | |
TOTAL CONVERTIBLE PREFERRED STOCKS | 86,270,245 | ||
Nonconvertible Preferred Stocks - 0.1% | |||
Diversified Financial Services - 0.1% | |||
Other Diversified Financial Services - 0.1% | |||
Thriveworks TopCo LLC Series B (d)(e)(f) | 473,270 | 13,584,368 | |
TOTAL PREFERRED STOCKS | |||
(Cost $108,369,591) | 99,854,613 | ||
Money Market Funds - 2.6% | |||
Fidelity Cash Central Fund 0.07% (g) | 36,257,443 | 36,264,694 | |
Fidelity Securities Lending Cash Central Fund 0.07% (g)(h) | 202,841,567 | 202,861,851 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $239,124,795) | 239,126,545 | ||
TOTAL INVESTMENT IN SECURITIES - 101.7% | |||
(Cost $6,537,657,416) | 9,156,213,296 | ||
NET OTHER ASSETS (LIABILITIES) - (1.7)% | (157,004,507) | ||
NET ASSETS - 100% | $8,999,208,789 |
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 $129,548,096 or 1.4% of net assets.
(d) Restricted securities (including private placements) - 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 $146,727,573 or 1.6% of net assets.
(e) Level 3 security
(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 |
Aledade, Inc. Series B1 | 5/7/21 | $7,704,855 |
Aristea Therapeutics, Inc. Series B | 10/6/20 | $5,719,912 |
Asimov, Inc. Series B | 10/29/21 | $9,401,345 |
Caris Life Sciences, Inc. Series D | 5/11/21 | $25,968,770 |
dMed Biopharmaceutical Co. Ltd. Series C | 12/1/20 | $5,403,602 |
Element Biosciences, Inc. Series C | 6/21/21 | $11,763,880 |
ElevateBio LLC Series C | 3/9/21 | $1,069,306 |
Inscripta, Inc. Series E | 3/30/21 | $11,322,073 |
Omada Health, Inc. Series E | 12/22/21 | $12,908,103 |
The Beauty Health Co. | 12/8/20 | $18,000,000 |
The Oncology Institute, Inc. | 6/28/21 | $22,325,810 |
Thriveworks TopCo LLC Series B | 7/23/21 - 2/25/22 | $13,584,368 |
Wugen, Inc. Series B | 7/9/21 | $3,523,377 |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $22,296,160 | $1,476,216,676 | $1,462,248,142 | $25,705 | $-- | $-- | $36,264,694 | 0.1% |
Fidelity Securities Lending Cash Central Fund 0.07% | 28,140,400 | 1,008,217,211 | 833,495,760 | 407,469 | -- | -- | 202,861,851 | 0.5% |
Total | $50,436,560 | $2,484,433,887 | $2,295,743,902 | $433,174 | $-- | $-- | $239,126,545 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
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 | Realized Gain (loss) | Change in Unrealized appreciation (depreciation) | Value, end of period |
Castlight Health, Inc. | $3,137,435 | $-- | $3,783,376 | $-- | $(7,357,396) | $8,003,337 | $-- |
Castlight Health, Inc. Class B | 6,800,000 | 2,239,148 | 10,250,000 | -- | (5,586,051) | 6,796,903 | -- |
The Oncology Institute, Inc. | -- | 22,325,811 | -- | -- | -- | (10,336,851) | -- |
Total | $9,937,435 | $24,564,959 | $14,033,376 | $-- | $(12,943,447) | $4,463,391 | $-- |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $8,817,232,138 | $8,331,873,023 | $485,359,115 | $-- |
Preferred Stocks | 99,854,613 | -- | -- | 99,854,613 |
Money Market Funds | 239,126,545 | 239,126,545 | -- | -- |
Total Investments in Securities: | $9,156,213,296 | $8,570,999,568 | $485,359,115 | $99,854,613 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:
Investments in Securities: | |
Preferred Stocks | |
Beginning Balance | $14,567,456 |
Total Realized Gain (Loss) | (1,704,009) |
Total Unrealized Gain (Loss) | (10,254,910) |
Cost of Purchases | 97,246,076 |
Proceeds of Sales | -- |
Amortization/Accretion | -- |
Transfers in to Level 3 | -- |
Transfers out of Level 3 | -- |
Ending Balance | $99,854,613 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2022 | $(11,958,921) |
Other Investments in Securities | |
Beginning Balance | $40,167,302 |
Total Realized Gain (Loss) | -- |
Total Unrealized Gain (Loss) | -- |
Cost of Purchases | -- |
Proceeds of Sales | -- |
Amortization/Accretion | -- |
Transfers in to Level 3 | -- |
Transfers out of Level 3 | (40,167,302) |
Ending Balance | $-- |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2022 | $-- |
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. Cost of purchases and proceeds of sales may include securities received and/or delivered through in-kind transactions. 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.
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 | 88.5% |
Switzerland | 3.1% |
Netherlands | 2.5% |
United Kingdom | 1.6% |
Denmark | 1.2% |
Cayman Islands | 1.1% |
Others (Individually Less Than 1%) | 2.0% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Health Care Portfolio
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $203,010,336) — See accompanying schedule: Unaffiliated issuers (cost $6,298,532,621) | $8,917,086,751 | |
Fidelity Central Funds (cost $239,124,795) | 239,126,545 | |
Total Investment in Securities (cost $6,537,657,416) | $9,156,213,296 | |
Cash | 8,208 | |
Receivable for investments sold | 70,588,189 | |
Receivable for fund shares sold | 3,298,246 | |
Dividends receivable | 5,049,028 | |
Reclaims receivable | 6,885,994 | |
Distributions receivable from Fidelity Central Funds | 43,974 | |
Prepaid expenses | 32,820 | |
Other receivables | 865,688 | |
Total assets | 9,242,985,443 | |
Liabilities | ||
Payable to custodian bank | $129 | |
Payable for investments purchased | 28,882,031 | |
Payable for fund shares redeemed | 6,038,240 | |
Accrued management fee | 3,931,293 | |
Other affiliated payables | 1,179,758 | |
Other payables and accrued expenses | 905,177 | |
Collateral on securities loaned | 202,840,026 | |
Total liabilities | 243,776,654 | |
Net Assets | $8,999,208,789 | |
Net Assets consist of: | ||
Paid in capital | $6,224,527,587 | |
Total accumulated earnings (loss) | 2,774,681,202 | |
Net Assets | $8,999,208,789 | |
Net Asset Value, offering price and redemption price per share ($8,999,208,789 ÷ 317,995,427 shares) | $28.30 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $60,876,289 | |
Income from Fidelity Central Funds (including $407,469 from security lending) | 433,174 | |
Income before foreign taxes withheld | 61,309,463 | |
Less foreign taxes withheld | (1,536,115) | |
Total income | 59,773,348 | |
Expenses | ||
Management fee | $54,746,491 | |
Transfer agent fees | 14,183,338 | |
Accounting fees | 1,303,800 | |
Custodian fees and expenses | 204,531 | |
Independent trustees' fees and expenses | 38,315 | |
Registration fees | 120,455 | |
Audit | 53,411 | |
Legal | 10,840 | |
Interest | 482 | |
Miscellaneous | 54,414 | |
Total expenses before reductions | 70,716,077 | |
Expense reductions | (242,142) | |
Total expenses after reductions | 70,473,935 | |
Net investment income (loss) | (10,700,587) | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 844,087,714 | |
Affiliated issuers | (12,943,447) | |
Foreign currency transactions | (44,501) | |
Total net realized gain (loss) | 831,099,766 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | (1,144,645,840) | |
Affiliated issuers | 4,463,391 | |
Unfunded commitments | (11,504,090) | |
Assets and liabilities in foreign currencies | (85,359) | |
Total change in net unrealized appreciation (depreciation) | (1,151,771,898) | |
Net gain (loss) | (320,672,132) | |
Net increase (decrease) in net assets resulting from operations | $(331,372,719) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(10,700,587) | $(1,302,962) |
Net realized gain (loss) | 831,099,766 | 1,254,393,714 |
Change in net unrealized appreciation (depreciation) | (1,151,771,898) | 1,433,331,438 |
Net increase (decrease) in net assets resulting from operations | (331,372,719) | 2,686,422,190 |
Distributions to shareholders | (929,859,235) | (1,043,319,929) |
Share transactions | ||
Proceeds from sales of shares | 1,043,831,682 | 2,530,824,884 |
Reinvestment of distributions | 861,023,255 | 966,756,493 |
Cost of shares redeemed | (1,997,490,811) | (2,007,793,854) |
Net increase (decrease) in net assets resulting from share transactions | (92,635,874) | 1,489,787,523 |
Total increase (decrease) in net assets | (1,353,867,828) | 3,132,889,784 |
Net Assets | ||
Beginning of period | 10,353,076,617 | 7,220,186,833 |
End of period | $8,999,208,789 | $10,353,076,617 |
Other Information | ||
Shares | ||
Sold | 32,480,198 | 84,148,004 |
Issued in reinvestment of distributions | 27,447,935 | 31,895,088 |
Redeemed | (63,667,769) | (66,461,246) |
Net increase (decrease) | (3,739,636) | 49,581,846 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Health Care Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B | 2018 B |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $32.18 | $26.53 | $24.48 | $23.56 | $20.89 |
Income from Investment Operations | |||||
Net investment income (loss)C,D | (.03) | –E | .04 | .02 | .05 |
Net realized and unrealized gain (loss) | (.92) | 9.23 | 2.40 | 2.90 | 3.17 |
Total from investment operations | (.95) | 9.23 | 2.44 | 2.92 | 3.22 |
Distributions from net investment income | (.04)F | (.18) | (.03) | (.03) | (.04) |
Distributions from net realized gain | (2.89)F | (3.40) | (.36) | (1.97) | (.51) |
Total distributions | (2.93) | (3.58) | (.39) | (2.00) | (.55) |
Net asset value, end of period | $28.30 | $32.18 | $26.53 | $24.48 | $23.56 |
Total ReturnG | (3.67)% | 36.00% | 9.84% | 13.30% | 15.49% |
Ratios to Average Net AssetsD,H,I | |||||
Expenses before reductions | .68% | .69% | .70% | .71% | .73% |
Expenses net of fee waivers, if any | .67% | .69% | .70% | .71% | .73% |
Expenses net of all reductions | .67% | .69% | .70% | .71% | .72% |
Net investment income (loss) | (.10)% | (.01)% | .16% | .10% | .23% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $8,999,209 | $10,353,077 | $7,220,187 | $7,450,707 | $6,923,404 |
Portfolio turnover rateJ | 31% | 52% | 36%K | 60%K | 75% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on August 10, 2018.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
E Amount represents less than $.005 per share.
F The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
K 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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Health Care Services Portfolio | 16.85% | 15.60% | 15.06% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Health Care Services Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789798901_740.jpg)
Period Ending Values | ||
$40,674 | Health Care Services Portfolio | |
$39,037 | S&P 500® Index |
Health Care Services Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Justin Segalini: For the fiscal year ending February 28, 2022, the fund gained 16.85%, underperforming the 25.65% gain of the MSCI U.S. IMI Health Care Providers & Services 25/50 Index, but outperforming the broad-based S&P 500® index. Versus the industry index, security selection was the primary detractor, especially in the health care services group. Stock selection in insurance brokers and managed health care also hampered the fund's relative result. The biggest individual relative detractor was an underweight position in CVS Health (+56%), which was among the fund's biggest holdings. Another notable relative detractor was an outsized stake in Cano Health (-62%). Another notable relative detractor was an overweighting in Oak Street Health (-67%). This period we increased our stake. In contrast, the top contributor to performance versus the industry index was an overweighting in managed health care. Stock selection in health care facilities and an underweighting in health care services also helped. Not owning HealthEquity, an index component that returned -35%, was the largest individual relative contributor. Also adding value was our outsized stake in UnitedHealth Group, which gained about 45%. The stock was the fund's largest holding. Avoiding Pennant Group, an index component that returned -69%, also aided relative performance. Notable changes in positioning include increased exposure to the health care facilities subindustry and a lower allocation to health care 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.
Health Care Services Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
UnitedHealth Group, Inc. | 24.5 |
Humana, Inc. | 8.3 |
Cigna Corp. | 7.9 |
Centene Corp. | 6.5 |
Anthem, Inc. | 4.9 |
HCA Holdings, Inc. | 4.7 |
Molina Healthcare, Inc. | 4.7 |
CVS Health Corp. | 4.6 |
AmerisourceBergen Corp. | 4.6 |
Surgery Partners, Inc. | 2.8 |
73.5 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Health Care Providers & Services | 97.5% | |
Health Care Technology | 1.4% | |
Diversified Financial Services | 0.2% | |
All Others* | 0.9% |
* Includes short-term investments and net other assets (liabilities).
Health Care Services Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 98.8% | |||
Shares | Value | ||
Health Care Providers & Services - 97.5% | |||
Health Care Distributors & Services - 6.4% | |||
AmerisourceBergen Corp. | 390,600 | $55,672,218 | |
McKesson Corp. | 77,600 | 21,336,896 | |
77,009,114 | |||
Health Care Facilities - 14.6% | |||
Brookdale Senior Living, Inc. (a) | 1,626,000 | 11,186,880 | |
Cano Health, Inc. (a)(b) | 1,197,800 | 5,833,286 | |
Encompass Health Corp. | 350,700 | 23,153,214 | |
HCA Holdings, Inc. | 228,000 | 57,070,680 | |
Rede D'Oregon Sao Luiz SA (c) | 470,900 | 4,661,743 | |
Surgery Partners, Inc. (a)(b) | 643,700 | 33,646,199 | |
Tenet Healthcare Corp. (a) | 317,000 | 27,258,830 | |
U.S. Physical Therapy, Inc. (b) | 159,600 | 14,678,412 | |
177,489,244 | |||
Health Care Services - 27.1% | |||
1Life Healthcare, Inc. (a) | 147,200 | 1,591,232 | |
agilon health, Inc. (a)(b) | 744,300 | 15,049,746 | |
Amedisys, Inc. (a) | 33,700 | 5,400,088 | |
Andlauer Healthcare Group, Inc. | 184,939 | 6,583,391 | |
CareMax, Inc. (d) | 379,900 | 2,199,621 | |
CareMax, Inc. Class A (a)(b) | 1,356,800 | 7,855,872 | |
Chemed Corp. | 67,500 | 32,284,575 | |
Cigna Corp. | 404,172 | 96,104,018 | |
CVS Health Corp. | 539,570 | 55,926,431 | |
DaVita HealthCare Partners, Inc. (a) | 186,100 | 20,986,497 | |
Guardant Health, Inc. (a) | 112,100 | 7,428,867 | |
LHC Group, Inc. (a) | 135,496 | 18,450,490 | |
LifeStance Health Group, Inc. (b) | 1,036,100 | 9,770,423 | |
Oak Street Health, Inc. (a)(b) | 750,027 | 13,132,973 | |
Option Care Health, Inc. (a) | 1,054,432 | 27,098,902 | |
P3 Health Partners, Inc. (d) | 250,000 | 1,400,000 | |
Quest Diagnostics, Inc. | 58,900 | 7,731,803 | |
328,994,929 | |||
Managed Health Care - 49.4% | |||
Alignment Healthcare, Inc. (a)(b) | 738,696 | 6,234,594 | |
Anthem, Inc. | 130,302 | 58,876,959 | |
Centene Corp. (a) | 959,084 | 79,239,520 | |
Humana, Inc. | 232,600 | 101,022,832 | |
Molina Healthcare, Inc. (a) | 185,800 | 57,016,446 | |
UnitedHealth Group, Inc. | 625,350 | 297,585,304 | |
599,975,655 | |||
TOTAL HEALTH CARE PROVIDERS & SERVICES | 1,183,468,942 | ||
Health Care Technology - 1.3% | |||
Health Care Technology - 1.3% | |||
Change Healthcare, Inc. (a) | 533,800 | 11,433,996 | |
Phreesia, Inc. (a) | 154,535 | 4,758,133 | |
16,192,129 | |||
TOTAL COMMON STOCKS | |||
(Cost $577,344,821) | 1,199,661,071 | ||
Preferred Stocks - 0.3% | |||
Convertible Preferred Stocks - 0.1% | |||
Health Care Technology - 0.1% | |||
Health Care Technology - 0.1% | |||
Aledade, Inc. Series B1 (d)(e) | 52,232 | 1,764,397 | |
Nonconvertible Preferred Stocks - 0.2% | |||
Diversified Financial Services - 0.2% | |||
Other Diversified Financial Services - 0.2% | |||
Thriveworks TopCo LLC Series B (d)(e)(f) | 69,639 | 1,998,863 | |
TOTAL PREFERRED STOCKS | |||
(Cost $3,998,863) | 3,763,260 | ||
Money Market Funds - 4.0% | |||
Fidelity Cash Central Fund 0.07% (g) | 1,066,973 | 1,067,186 | |
Fidelity Securities Lending Cash Central Fund 0.07% (g)(h) | 47,749,855 | 47,754,630 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $48,821,816) | 48,821,816 | ||
TOTAL INVESTMENT IN SECURITIES - 103.1% | |||
(Cost $630,165,500) | 1,252,246,147 | ||
NET OTHER ASSETS (LIABILITIES) - (3.1)% | (38,214,055) | ||
NET ASSETS - 100% | $1,214,032,092 |
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 $4,661,743 or 0.4% of net assets.
(d) Restricted securities (including private placements) - 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 $7,362,881 or 0.6% of net assets.
(e) Level 3 security
(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 |
Aledade, Inc. Series B1 | 5/7/21 | $2,000,000 |
CareMax, Inc. | 12/18/20 | $3,799,000 |
P3 Health Partners, Inc. | 5/25/21 | $2,500,000 |
Thriveworks TopCo LLC Series B | 7/23/21 - 2/25/22 | $1,998,863 |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $2,538,347 | $256,839,581 | $258,310,742 | $4,901 | $-- | $-- | $1,067,186 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 45,664,629 | 331,843,370 | 329,753,369 | 106,992 | -- | -- | 47,754,630 | 0.1% |
Total | $48,202,976 | $588,682,951 | $588,064,111 | $111,893 | $-- | $-- | $48,821,816 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $1,199,661,071 | $1,199,661,071 | $-- | $-- |
Preferred Stocks | 3,763,260 | -- | -- | 3,763,260 |
Money Market Funds | 48,821,816 | 48,821,816 | -- | -- |
Total Investments in Securities: | $1,252,246,147 | $1,248,482,887 | $-- | $3,763,260 |
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, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $46,940,175) — See accompanying schedule: Unaffiliated issuers (cost $581,343,684) | $1,203,424,331 | |
Fidelity Central Funds (cost $48,821,816) | 48,821,816 | |
Total Investment in Securities (cost $630,165,500) | $1,252,246,147 | |
Receivable for investments sold | 9,767,687 | |
Receivable for fund shares sold | 782,160 | |
Dividends receivable | 65,318 | |
Distributions receivable from Fidelity Central Funds | 6,349 | |
Prepaid expenses | 3,931 | |
Other receivables | 97,005 | |
Total assets | 1,262,968,597 | |
Liabilities | ||
Payable for fund shares redeemed | $367,369 | |
Accrued management fee | 522,917 | |
Other affiliated payables | 173,283 | |
Other payables and accrued expenses | 121,734 | |
Collateral on securities loaned | 47,751,202 | |
Total liabilities | 48,936,505 | |
Net Assets | $1,214,032,092 | |
Net Assets consist of: | ||
Paid in capital | $546,193,415 | |
Total accumulated earnings (loss) | 667,838,677 | |
Net Assets | $1,214,032,092 | |
Net Asset Value, offering price and redemption price per share ($1,214,032,092 ÷ 9,198,377 shares) | $131.98 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $11,201,432 | |
Income from Fidelity Central Funds (including $106,992 from security lending) | 111,893 | |
Total income | 11,313,325 | |
Expenses | ||
Management fee | $6,404,934 | |
Transfer agent fees | 1,766,905 | |
Accounting fees | 392,695 | |
Custodian fees and expenses | 12,005 | |
Independent trustees' fees and expenses | 4,390 | |
Registration fees | 31,975 | |
Audit | 38,427 | |
Legal | 3,242 | |
Interest | 145 | |
Miscellaneous | 6,498 | |
Total expenses before reductions | 8,661,216 | |
Expense reductions | (27,859) | |
Total expenses after reductions | 8,633,357 | |
Net investment income (loss) | 2,679,968 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 122,702,747 | |
Foreign currency transactions | (943) | |
Total net realized gain (loss) | 122,701,804 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | 59,686,195 | |
Unfunded commitments | (2,759,299) | |
Assets and liabilities in foreign currencies | 284 | |
Total change in net unrealized appreciation (depreciation) | 56,927,180 | |
Net gain (loss) | 179,628,984 | |
Net increase (decrease) in net assets resulting from operations | $182,308,952 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $2,679,968 | $556,699 |
Net realized gain (loss) | 122,701,804 | 86,790,581 |
Change in net unrealized appreciation (depreciation) | 56,927,180 | 181,176,828 |
Net increase (decrease) in net assets resulting from operations | 182,308,952 | 268,524,108 |
Distributions to shareholders | (87,625,390) | (9,375,003) |
Share transactions | ||
Proceeds from sales of shares | 148,662,940 | 168,402,095 |
Reinvestment of distributions | 81,964,453 | 8,736,753 |
Cost of shares redeemed | (212,192,301) | (338,580,546) |
Net increase (decrease) in net assets resulting from share transactions | 18,435,092 | (161,441,698) |
Total increase (decrease) in net assets | 113,118,654 | 97,707,407 |
Net Assets | ||
Beginning of period | 1,100,913,438 | 1,003,206,031 |
End of period | $1,214,032,092 | $1,100,913,438 |
Other Information | ||
Shares | ||
Sold | 1,120,061 | 1,602,271 |
Issued in reinvestment of distributions | 621,521 | 89,436 |
Redeemed | (1,608,688) | (3,218,003) |
Net increase (decrease) | 132,894 | (1,526,296) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Health Care Services Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $121.44 | $94.72 | $89.28 | $92.21 | $89.93 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .29 | .06 | .23 | .13 | .11 |
Net realized and unrealized gain (loss) | 20.01 | 27.59 | 5.50 | 8.27 | 14.23 |
Total from investment operations | 20.30 | 27.65 | 5.73 | 8.40 | 14.34 |
Distributions from net investment income | (.22)D | (.93) | (.29) | (.10) | (.10) |
Distributions from net realized gain | (9.55)D | – | – | (11.23) | (11.96) |
Total distributions | (9.76)E | (.93) | (.29) | (11.33) | (12.06) |
Redemption fees added to paid in capitalB | – | – | – | – | –F |
Net asset value, end of period | $131.98 | $121.44 | $94.72 | $89.28 | $92.21 |
Total ReturnG | 16.85% | 29.43% | 6.39% | 9.61% | 17.03% |
Ratios to Average Net AssetsC,H,I | |||||
Expenses before reductions | .71% | .73% | .75% | .76% | .77% |
Expenses net of fee waivers, if any | .71% | .73% | .75% | .76% | .77% |
Expenses net of all reductions | .71% | .73% | .75% | .76% | .76% |
Net investment income (loss) | .22% | .05% | .25% | .14% | .12% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $1,214,032 | $1,100,913 | $1,003,206 | $1,343,070 | $829,692 |
Portfolio turnover rateJ | 35% | 34% | 37% | 60% | 65% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
E Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the financial statements.
Medical Technology and Devices 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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Medical Technology and Devices Portfolio | 2.95% | 18.45% | 19.00% |
Prior to January 1, 2018, the fund was named Medical Equipment and Systems Portfolio, and the fund operated under certain different investment policies and compared its performance to a different 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 Medical Technology and Devices Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789798553_740.jpg)
Period Ending Values | ||
$56,925 | Medical Technology and Devices Portfolio | |
$39,037 | S&P 500® Index |
Medical Technology and Devices Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Eddie Yoon: For the fiscal year ending February 28, 2022, the fund gained 2.95%, trailing the 4.15% advance of the MSCI U.S. IMI Custom Health Care Technology and Equipment 25/50 Linked Index, as well as the broad-based S&P 500® index. Versus the industry index, security selection was the primary detractor, especially in the health care services industry. Stock selection in health care equipment and biotechnology also hurt. The fund's largest individual relative detractor was an overweighting in Penumbra, which returned -22% the past 12 months. The company was among our biggest holdings. Also hurting performance was our outsized stake in Nevro, which returned -57%. We added to our stake the past year. Avoiding Edwards Lifesciences, an index component that gained 35%, also hurt relative performance. In contrast, the largest contributors to performance versus the industry index were security selection and an overweighting in life sciences tools & services. Also lifting the fund's relative performance was an underweighting in health care technology and health care supplies. Not owning Teladoc Health, an index component that returned roughly -66%, was the largest individual relative contributor. Our second-largest relative contributor this period was avoiding Medtronic, an index component that returned roughly -8%. Another notable relative contributor was an underweighting in Illumina (-26%), a position we established the past 12 months. Notable changes in positioning include a higher allocation to the health care technology and life sciences tools & services subindustries.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 Technology and Devices Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
Thermo Fisher Scientific, Inc. | 13.3 |
Danaher Corp. | 12.3 |
Boston Scientific Corp. | 8.9 |
ResMed, Inc. | 4.0 |
Insulet Corp. | 3.8 |
Abbott Laboratories | 3.3 |
Penumbra, Inc. | 3.3 |
West Pharmaceutical Services, Inc. | 3.0 |
Charles River Laboratories International, Inc. | 3.0 |
DexCom, Inc. | 2.9 |
57.8 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Life Sciences Tools & Services | 45.7% | |
Health Care Equipment & Supplies | 43.4% | |
Health Care Technology | 5.1% | |
Biotechnology | 2.3% | |
Health Care Providers & Services | 0.8% | |
All Others* | 2.7% |
* Includes short-term investments and net other assets (liabilities).
Medical Technology and Devices Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 96.3% | |||
Shares | Value | ||
Biotechnology - 1.0% | |||
Biotechnology - 1.0% | |||
Abcam PLC (a) | 1,200,000 | $20,071,799 | |
Avid Bioservices, Inc. (a)(b) | 1,700,000 | 34,816,000 | |
Saluda Medical Pty Ltd. warrants (a)(c)(d) | 470,371 | 1,349,965 | |
Twist Bioscience Corp. (a) | 640,000 | 35,801,600 | |
92,039,364 | |||
Health Care Equipment & Supplies - 43.0% | |||
Health Care Equipment - 40.8% | |||
Abbott Laboratories | 2,450,000 | 295,519,000 | |
Angiodynamics, Inc. (a) | 1,280,000 | 30,118,400 | |
Boston Scientific Corp. (a) | 18,000,000 | 795,060,000 | |
DexCom, Inc. (a) | 615,000 | 254,554,650 | |
Envista Holdings Corp. (a) | 4,000,000 | 192,000,000 | |
Hologic, Inc. (a) | 1,900,000 | 135,223,000 | |
Insulet Corp. (a) | 1,280,000 | 338,803,200 | |
Intuitive Surgical, Inc. (a) | 700,000 | 203,231,000 | |
Masimo Corp. (a) | 700,000 | 110,215,000 | |
Nevro Corp. (a) | 1,280,000 | 91,776,000 | |
Novocure Ltd. (a) | 181,459 | 14,854,234 | |
Outset Medical, Inc. (a) | 1,000,000 | 43,970,000 | |
Penumbra, Inc. (a) | 1,313,503 | 291,256,155 | |
PROCEPT BioRobotics Corp. | 300,000 | 7,494,000 | |
PROCEPT BioRobotics Corp. | 1,308,117 | 31,042,925 | |
ResMed, Inc. | 1,460,000 | 360,255,000 | |
Shenzhen Mindray Bio-Medical Electronics Co. Ltd. (A Shares) | 799,999 | 41,476,827 | |
Stryker Corp. | 900,000 | 237,015,000 | |
Tandem Diabetes Care, Inc. (a) | 1,400,000 | 157,682,000 | |
3,631,546,391 | |||
Health Care Supplies - 2.2% | |||
Align Technology, Inc. (a) | 265,000 | 135,536,900 | |
Nanosonics Ltd. (a)(e) | 21,000,000 | 63,907,137 | |
199,444,037 | |||
TOTAL HEALTH CARE EQUIPMENT & SUPPLIES | 3,830,990,428 | ||
Health Care Providers & Services - 0.7% | |||
Health Care Services - 0.7% | |||
1Life Healthcare, Inc. (a) | 1,250,000 | 13,512,500 | |
Guardant Health, Inc. (a) | 326,828 | 21,658,892 | |
LifeStance Health Group, Inc. | 3,200,000 | 30,176,000 | |
65,347,392 | |||
Health Care Technology - 4.7% | |||
Health Care Technology - 4.7% | |||
Change Healthcare, Inc. (a) | 3,600,000 | 77,112,000 | |
Definitive Healthcare Corp. (b) | 750,000 | 17,340,000 | |
DNA Script (c)(d) | 1,220 | 974,647 | |
DNA Script (c)(d) | 4,668 | 3,729,221 | |
Doximity, Inc. (b) | 780,000 | 47,853,000 | |
Health Catalyst, Inc. (a)(b) | 1,427,277 | 38,707,752 | |
Inspire Medical Systems, Inc. (a) | 540,000 | 131,792,400 | |
Medlive Technology Co. Ltd. (f) | 3,000,000 | 4,430,169 | |
Phreesia, Inc. (a) | 500,000 | 15,395,000 | |
Veeva Systems, Inc. Class A (a) | 330,000 | 75,586,500 | |
412,920,689 | |||
Life Sciences Tools & Services - 45.7% | |||
Life Sciences Tools & Services - 45.7% | |||
10X Genomics, Inc. Class B (a)(f) | 392,772 | 31,999,135 | |
Avantor, Inc. (a) | 6,700,000 | 232,423,000 | |
Bio-Rad Laboratories, Inc. Class A (a) | 218,000 | 136,459,280 | |
Bio-Techne Corp. | 128,000 | 53,684,480 | |
Bruker Corp. | 2,800,000 | 197,036,000 | |
Charles River Laboratories International, Inc. (a) | 915,000 | 266,411,400 | |
Danaher Corp. | 4,000,000 | 1,097,640,000 | |
Lonza Group AG | 300,000 | 207,570,697 | |
Maravai LifeSciences Holdings, Inc. (a) | 2,280,000 | 89,079,600 | |
Nanostring Technologies, Inc. (a) | 1,224,878 | 43,434,174 | |
Olink Holding AB ADR (a)(b) | 1,280,000 | 21,875,200 | |
Quanterix Corp. (a) | 1,127,487 | 38,041,411 | |
Sartorius Stedim Biotech | 400,000 | 153,388,306 | |
Seer, Inc. (a)(b) | 1,559,532 | 23,892,030 | |
Stevanato Group SpA (b) | 1,400,000 | 22,470,000 | |
Thermo Fisher Scientific, Inc. | 2,180,000 | 1,185,919,996 | |
West Pharmaceutical Services, Inc. | 690,000 | 267,085,200 | |
4,068,409,909 | |||
Personal Products - 0.8% | |||
Personal Products - 0.8% | |||
The Beauty Health Co. (a) | 581,439 | 11,268,288 | |
The Beauty Health Co. (d) | 3,000,000 | 58,140,000 | |
69,408,288 | |||
Specialty Retail - 0.4% | |||
Specialty Stores - 0.4% | |||
Warby Parker, Inc. (a)(b) | 1,200,000 | 35,916,000 | |
TOTAL COMMON STOCKS | |||
(Cost $5,257,782,527) | 8,575,032,070 | ||
Convertible Preferred Stocks - 2.7% | |||
Biotechnology - 1.3% | |||
Biotechnology - 1.3% | |||
Asimov, Inc. Series B (c)(d) | 97,985 | 9,081,318 | |
Caris Life Sciences, Inc. Series D (c)(d) | 2,803,935 | 18,674,207 | |
Element Biosciences, Inc. Series B (a)(c)(d) | 2,385,223 | 39,260,771 | |
ElevateBio LLC Series C (c)(d) | 214,700 | 777,429 | |
Inscripta, Inc. Series D (a)(c)(d) | 3,938,731 | 28,792,124 | |
Saluda Medical Pty Ltd. Series D (c)(d) | 1,567,904 | 20,000,011 | |
116,585,860 | |||
Health Care Equipment & Supplies - 0.2% | |||
Health Care Supplies - 0.2% | |||
Kardium, Inc. Series D6 (a)(c)(d) | 13,783,189 | 14,001,515 | |
Health Care Providers & Services - 0.1% | |||
Health Care Services - 0.1% | |||
Conformal Medical, Inc. Series C (a)(c)(d) | 2,605,625 | 10,344,331 | |
dMed Biopharmaceutical Co. Ltd. Series C (a)(c)(d) | 309,255 | 3,067,810 | |
13,412,141 | |||
Health Care Technology - 0.4% | |||
Health Care Technology - 0.4% | |||
Aledade, Inc. Series B1 (c)(d) | 175,232 | 5,919,337 | |
DNA Script Series B (c)(d) | 59 | 47,135 | |
Omada Health, Inc. Series E (c)(d) | 2,182,939 | 13,087,156 | |
PrognomIQ, Inc.: | |||
Series A5 (a)(c)(d) | 833,333 | 2,549,999 | |
Series B (a)(c)(d) | 2,735,093 | 8,369,385 | |
Series C (c)(d) | 752,098 | 2,301,420 | |
32,274,432 | |||
Textiles, Apparel & Luxury Goods - 0.7% | |||
Textiles - 0.7% | |||
DNA Script Series C (c)(d) | 28,249 | 22,567,861 | |
Freenome, Inc.: | |||
Series C (a)(c)(d) | 2,268,156 | 26,469,381 | |
Series D (c)(d) | 1,325,855 | 15,472,728 | |
64,509,970 | |||
TOTAL CONVERTIBLE PREFERRED STOCKS | |||
(Cost $189,614,070) | 240,783,918 | ||
Preferred Securities - 0.2% | |||
Health Care Equipment & Supplies - 0.2% | |||
Health Care Supplies - 0.2% | |||
Kardium, Inc. 0% (c)(d)(g) | |||
(Cost $19,551,861) | 19,551,861 | 19,551,861 | |
Money Market Funds - 1.1% | |||
Fidelity Cash Central Fund 0.07% (h) | 21,428,816 | 21,433,102 | |
Fidelity Securities Lending Cash Central Fund 0.07% (h)(i) | 73,445,282 | 73,452,626 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $94,885,728) | 94,885,728 | ||
TOTAL INVESTMENT IN SECURITIES - 100.3% | |||
(Cost $5,561,834,186) | 8,930,253,577 | ||
NET OTHER ASSETS (LIABILITIES) - (0.3)% | (24,419,260) | ||
NET ASSETS - 100% | $8,905,834,317 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Level 3 security
(d) Restricted securities (including private placements) - 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 $324,529,612 or 3.6% of net assets.
(e) Affiliated company
(f) 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 $36,429,304 or 0.4% of net assets.
(g) Security is perpetual in nature with no stated maturity date.
(h) 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.
(i) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
Security | Acquisition Date | Acquisition Cost |
Aledade, Inc. Series B1 | 5/7/21 | $6,709,756 |
Asimov, Inc. Series B | 10/29/21 | $9,081,318 |
Caris Life Sciences, Inc. Series D | 5/11/21 | $22,711,874 |
Conformal Medical, Inc. Series C | 7/24/20 | $9,554,996 |
dMed Biopharmaceutical Co. Ltd. Series C | 12/1/20 | $4,392,395 |
DNA Script | 12/17/21 | $4,714,776 |
DNA Script Series B | 12/17/21 | $47,244 |
DNA Script Series C | 10/1/21 | $24,572,393 |
Element Biosciences, Inc. Series B | 12/13/19 | $12,500,000 |
ElevateBio LLC Series C | 3/9/21 | $900,667 |
Freenome, Inc. Series C | 8/14/20 | $14,999,996 |
Freenome, Inc. Series D | 11/22/21 | $9,999,996 |
Inscripta, Inc. Series D | 11/13/20 | $18,000,001 |
Kardium, Inc. Series D6 | 12/30/20 | $14,001,515 |
Kardium, Inc. 0% | 12/30/20 | $19,551,861 |
Omada Health, Inc. Series E | 12/22/21 | $13,087,156 |
PrognomIQ, Inc. Series A5 | 8/20/20 | $503,333 |
PrognomIQ, Inc. Series B | 9/11/20 | $6,249,999 |
PrognomIQ, Inc. Series C | 2/16/22 | $2,301,420 |
Saluda Medical Pty Ltd. Series D | 1/20/22 | $20,000,011 |
Saluda Medical Pty Ltd. warrants | 1/20/22 | $0 |
The Beauty Health Co. | 12/8/20 | $30,000,000 |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $29,308,147 | $1,267,420,893 | $1,275,295,938 | $17,952 | $-- | $-- | $21,433,102 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 325,618,183 | 656,916,928 | 909,082,485 | 219,893 | -- | -- | 73,452,626 | 0.2% |
Total | $354,926,330 | $1,924,337,821 | $2,184,378,423 | $237,845 | $-- | $-- | $94,885,728 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
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 | Realized Gain (loss) | Change in Unrealized appreciation (depreciation) | Value, end of period |
Angiodynamics, Inc. | $16,253,010 | $32,613,936 | $25,062,938 | $-- | $3,423,524 | $2,890,868 | $-- |
Intersect ENT, Inc. | 57,025,000 | 13,715,218 | 87,430,546 | -- | 31,932,434 | (15,242,106) | -- |
Nanosonics Ltd. | 101,147,280 | 951,722 | 3,556,358 | -- | (970,264) | (33,665,243) | 63,907,137 |
ViewRay, Inc. | 38,368,000 | -- | 45,339,866 | -- | 16,273,757 | (9,301,891) | -- |
Total | $212,793,290 | $47,280,876 | $161,389,708 | $-- | $50,659,451 | $(55,318,372) | $63,907,137 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $8,575,032,070 | $8,156,904,510 | $412,073,727 | $6,053,833 |
Convertible Preferred Stocks | 240,783,918 | -- | -- | 240,783,918 |
Preferred Securities | 19,551,861 | -- | -- | 19,551,861 |
Money Market Funds | 94,885,728 | 94,885,728 | -- | -- |
Total Investments in Securities: | $8,930,253,577 | $8,251,790,238 | $412,073,727 | $266,389,612 |
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 | $99,803,398 |
Total Realized Gain (Loss) | -- |
Total Unrealized Gain (Loss) | 31,568,686 |
Cost of Purchases | 109,411,834 |
Proceeds of Sales | -- |
Amortization/Accretion | -- |
Transfers in to Level 3 | -- |
Transfers out of Level 3 | -- |
Ending Balance | $240,783,918 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2022 | $31,568,686 |
Other Investments in Securities | |
Beginning Balance | $19,551,861 |
Total Realized Gain (Loss) | -- |
Total Unrealized Gain (Loss) | 1,339,057 |
Cost of Purchases | 4,714,776 |
Proceeds of Sales | -- |
Amortization/Accretion | -- |
Transfers in to Level 3 | -- |
Transfers out of Level 3 | -- |
Ending Balance | $25,605,694 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2022 | $1,339,057 |
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. Cost of purchases and proceeds of sales may include securities received and/or delivered through in-kind transactions. 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.
Medical Technology and Devices Portfolio
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $71,614,304) — See accompanying schedule: Unaffiliated issuers (cost $5,418,755,579) | $8,771,460,712 | |
Fidelity Central Funds (cost $94,885,728) | 94,885,728 | |
Other affiliated issuers (cost $48,192,879) | 63,907,137 | |
Total Investment in Securities (cost $5,561,834,186) | $8,930,253,577 | |
Cash | 8,208 | |
Receivable for investments sold | 72,035,373 | |
Receivable for fund shares sold | 4,012,401 | |
Dividends receivable | 951,688 | |
Distributions receivable from Fidelity Central Funds | 14,203 | |
Prepaid expenses | 21,192 | |
Other receivables | 327,351 | |
Total assets | 9,007,623,993 | |
Liabilities | ||
Payable to custodian bank | $221 | |
Payable for investments purchased | 14,212,024 | |
Payable for fund shares redeemed | 8,605,349 | |
Accrued management fee | 3,920,438 | |
Other affiliated payables | 1,215,788 | |
Other payables and accrued expenses | 391,795 | |
Collateral on securities loaned | 73,444,061 | |
Total liabilities | 101,789,676 | |
Net Assets | $8,905,834,317 | |
Net Assets consist of: | ||
Paid in capital | $5,510,548,297 | |
Total accumulated earnings (loss) | 3,395,286,020 | |
Net Assets | $8,905,834,317 | |
Net Asset Value, offering price and redemption price per share ($8,905,834,317 ÷ 125,743,991 shares) | $70.83 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $21,299,363 | |
Income from Fidelity Central Funds (including $219,893 from security lending) | 237,845 | |
Total income | 21,537,208 | |
Expenses | ||
Management fee | $51,205,295 | |
Transfer agent fees | 13,698,548 | |
Accounting fees | 1,276,169 | |
Custodian fees and expenses | 142,839 | |
Independent trustees' fees and expenses | 34,835 | |
Registration fees | 250,952 | |
Audit | 44,226 | |
Legal | 7,373 | |
Interest | 2,557 | |
Miscellaneous | 43,848 | |
Total expenses before reductions | 66,706,642 | |
Expense reductions | (229,762) | |
Total expenses after reductions | 66,476,880 | |
Net investment income (loss) | (44,939,672) | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 447,917,557 | |
Affiliated issuers | 50,659,451 | |
Foreign currency transactions | 135,407 | |
Total net realized gain (loss) | 498,712,415 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | (186,533,936) | |
Affiliated issuers | (55,318,372) | |
Unfunded commitments | 192,000 | |
Assets and liabilities in foreign currencies | (3,341) | |
Total change in net unrealized appreciation (depreciation) | (241,663,649) | |
Net gain (loss) | 257,048,766 | |
Net increase (decrease) in net assets resulting from operations | $212,109,094 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(44,939,672) | $(26,124,031) |
Net realized gain (loss) | 498,712,415 | 876,677,539 |
Change in net unrealized appreciation (depreciation) | (241,663,649) | 1,661,035,472 |
Net increase (decrease) in net assets resulting from operations | 212,109,094 | 2,511,588,980 |
Distributions to shareholders | (808,325,364) | (514,309,620) |
Share transactions | ||
Proceeds from sales of shares | 1,949,163,820 | 1,910,160,299 |
Reinvestment of distributions | 757,192,690 | 484,677,137 |
Cost of shares redeemed | (1,877,605,232) | (1,777,583,064) |
Net increase (decrease) in net assets resulting from share transactions | 828,751,278 | 617,254,372 |
Total increase (decrease) in net assets | 232,535,008 | 2,614,533,732 |
Net Assets | ||
Beginning of period | 8,673,299,309 | 6,058,765,577 |
End of period | $8,905,834,317 | $8,673,299,309 |
Other Information | ||
Shares | ||
Sold | 24,345,738 | 27,985,720 |
Issued in reinvestment of distributions | 9,855,790 | 7,325,256 |
Redeemed | (24,120,700) | (28,081,786) |
Net increase (decrease) | 10,080,828 | 7,229,190 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Medical Technology and Devices Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $74.99 | $55.88 | $52.92 | $46.09 | $41.48 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | (.37) | (.24) | (.08) | (.04) | .05 |
Net realized and unrealized gain (loss) | 2.97 | 24.19 | 4.10 | 10.40 | 7.31 |
Total from investment operations | 2.60 | 23.95 | 4.02 | 10.36 | 7.36 |
Distributions from net investment income | – | – | – | – | (.08) |
Distributions from net realized gain | (6.76) | (4.84) | (1.06) | (3.53) | (2.67) |
Total distributions | (6.76) | (4.84) | (1.06) | (3.53) | (2.75) |
Net asset value, end of period | $70.83 | $74.99 | $55.88 | $52.92 | $46.09 |
Total ReturnD | 2.95% | 44.20% | 7.46% | 23.85% | 18.01% |
Ratios to Average Net AssetsC,E,F | |||||
Expenses before reductions | .68% | .70% | .71% | .73% | .76% |
Expenses net of fee waivers, if any | .68% | .70% | .71% | .73% | .76% |
Expenses net of all reductions | .68% | .70% | .71% | .73% | .75% |
Net investment income (loss) | (.46)% | (.36)% | (.15)% | (.07)% | .11% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $8,905,834 | $8,673,299 | $6,058,766 | $6,787,645 | $4,063,926 |
Portfolio turnover rateG | 32% | 58% | 35% | 43% | 77% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
G Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Pharmaceuticals Portfolio | 5.15% | 11.34% | 12.23% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Pharmaceuticals Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789798292_740.jpg)
Period Ending Values | ||
$31,708 | Pharmaceuticals Portfolio | |
$39,037 | S&P 500® Index |
Pharmaceuticals Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Karim Suwwan de Felipe: For the fiscal year ending February 28, 2022, the fund gained 5.15%, underperforming the 7.55% gain of the MSCI North America IMI + ADR Custom Pharmaceuticals 25/50 Linked Index, as well as the broad-based S&P 500® index. Versus the industry index, security selection was the primary detractor, especially in the biotechnology industry. Weak stock picks in life sciences tools & services and health care services also hindered the fund's relative result. Not owning Pfizer, an index component that gained 45%, was the largest individual relative detractor. Our second-largest relative detractor this period was avoiding Novo-Nordisk, an index component that gained about 47%. Another notable relative detractor was our lighter-than-index stake in GlaxoSmithKline (+31%). This period we increased our stake. Conversely, the top contributor to performance versus the industry index was our stock selection in pharmaceuticals. Security selection in health care equipment also lifted the fund's relative result. The biggest individual relative contributor was an overweight position in AstraZeneca (+29%). AstraZeneca was among the fund's biggest holdings. Our second-largest relative contributor this period was avoiding Canopy Growth, an index component that returned roughly -78%. Avoiding Tilray Brands, an index component that returned -75%, also aided relative performance. Notable changes in positioning include decreased exposure to the biotechnology subindustry.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.
Pharmaceuticals Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
Eli Lilly & Co. | 12.2 |
AstraZeneca PLC sponsored ADR | 11.3 |
Sanofi SA sponsored ADR | 10.2 |
Bristol-Myers Squibb Co. | 8.9 |
Roche Holding AG (participation certificate) | 6.6 |
Johnson & Johnson | 4.6 |
Merck & Co., Inc. | 4.0 |
Royalty Pharma PLC | 3.7 |
Merck KGaA | 3.4 |
Zoetis, Inc. Class A | 3.4 |
68.3 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Pharmaceuticals | 79.8% | |
Biotechnology | 12.2% | |
Health Care Equipment & Supplies | 3.0% | |
Life Sciences Tools & Services | 3.0% | |
Health Care Providers & Services | 0.3% | |
All Others* | 1.7% |
* Includes short-term investments and net other assets (liabilities).
Pharmaceuticals Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 98.1% | |||
Shares | Value | ||
Biotechnology - 12.0% | |||
Biotechnology - 12.0% | |||
Alnylam Pharmaceuticals, Inc. (a) | 21,571 | $3,404,982 | |
Amicus Therapeutics, Inc. (a)(b) | 295,700 | 2,406,998 | |
Argenx SE (a) | 17,400 | 5,038,054 | |
Argenx SE ADR (a) | 11,000 | 3,164,810 | |
Ascendis Pharma A/S sponsored ADR (a) | 51,300 | 5,765,607 | |
BioInvent International AB (a) | 540,500 | 2,019,298 | |
BioNTech SE ADR (a) | 115,500 | 17,418,555 | |
Blueprint Medicines Corp. (a) | 111,700 | 6,763,435 | |
Celldex Therapeutics, Inc. (a) | 73,400 | 2,194,660 | |
Cullinan Oncology, Inc. (a) | 88,100 | 1,263,354 | |
EQRx, Inc. (a) | 200,000 | 604,000 | |
Galapagos NV sponsored ADR (a)(b) | 36,900 | 2,443,887 | |
Generation Bio Co. (a) | 47,476 | 243,077 | |
Horizon Therapeutics PLC (a) | 158,800 | 14,477,796 | |
Innovent Biologics, Inc. (a)(c) | 279,500 | 1,250,035 | |
Intellia Therapeutics, Inc. (a) | 15,400 | 1,522,290 | |
Kalvista Pharmaceuticals, Inc. (a) | 99,000 | 1,588,950 | |
Leap Therapeutics, Inc. warrants 1/31/26 (a) | 606,000 | 492,545 | |
Legend Biotech Corp. ADR (a) | 147,400 | 5,835,566 | |
Protagonist Therapeutics, Inc. (a) | 73,900 | 1,794,292 | |
PTC Therapeutics, Inc. (a) | 181,600 | 6,377,792 | |
Sarepta Therapeutics, Inc. (a) | 44,300 | 3,393,823 | |
Springworks Therapeutics, Inc. (a) | 44,300 | 2,506,937 | |
Synlogic, Inc. (a)(b) | 520,800 | 1,031,184 | |
TG Therapeutics, Inc. (a) | 41,900 | 413,553 | |
uniQure B.V. (a) | 170,500 | 2,896,795 | |
Vertex Pharmaceuticals, Inc. (a) | 39,000 | 8,970,780 | |
Xencor, Inc. (a) | 49,568 | 1,551,974 | |
XOMA Corp. (a)(b) | 53,300 | 1,168,869 | |
Zai Lab Ltd. ADR (a) | 85,400 | 4,671,380 | |
112,675,278 | |||
Food & Staples Retailing - 0.0% | |||
Drug Retail - 0.0% | |||
MedAvail Holdings, Inc. (a) | 3,333 | 4,000 | |
Health Care Equipment & Supplies - 3.0% | |||
Health Care Equipment - 3.0% | |||
Angelalign Technology, Inc. (c) | 400 | 9,592 | |
Angiodynamics, Inc. (a)(b) | 282,000 | 6,635,460 | |
Boston Scientific Corp. (a) | 481,600 | 21,272,272 | |
27,917,324 | |||
Health Care Providers & Services - 0.3% | |||
Health Care Services - 0.3% | |||
Guardant Health, Inc. (a) | 37,400 | 2,478,498 | |
Life Sciences Tools & Services - 3.0% | |||
Life Sciences Tools & Services - 3.0% | |||
23andMe Holding Co. Class B (c) | 396,606 | 1,772,829 | |
Maravai LifeSciences Holdings, Inc. (a) | 502,600 | 19,636,582 | |
Sartorius Stedim Biotech | 16,500 | 6,327,268 | |
27,736,679 | |||
Pharmaceuticals - 79.8% | |||
Pharmaceuticals - 79.8% | |||
Arvinas Holding Co. LLC (a) | 55,600 | 3,603,436 | |
AstraZeneca PLC sponsored ADR | 1,728,300 | 105,218,904 | |
Asymchem Laboratories Tianjin Co. Ltd. (H Shares) (c) | 140,700 | 4,800,069 | |
Atea Pharmaceuticals, Inc. (a) | 5,867 | 37,197 | |
Axsome Therapeutics, Inc. (a)(b) | 43,400 | 1,219,974 | |
Bristol-Myers Squibb Co. | 1,210,480 | 83,123,662 | |
Catalent, Inc. (a) | 45,800 | 4,673,432 | |
Elanco Animal Health, Inc. (a) | 230,400 | 6,545,664 | |
Eli Lilly & Co. | 454,461 | 113,592,526 | |
GlaxoSmithKline PLC sponsored ADR | 276,300 | 11,565,918 | |
Harmony Biosciences Holdings, Inc. (a)(b) | 73,077 | 2,920,157 | |
Intra-Cellular Therapies, Inc. (a) | 107,000 | 5,936,360 | |
Johnson & Johnson | 263,150 | 43,306,596 | |
Merck & Co., Inc. | 493,736 | 37,810,303 | |
Merck KGaA | 160,100 | 31,755,448 | |
Nektar Therapeutics (a)(b) | 368,233 | 3,770,706 | |
NGM Biopharmaceuticals, Inc. (a) | 108,600 | 1,613,796 | |
Novartis AG sponsored ADR | 323,596 | 28,301,706 | |
Pliant Therapeutics, Inc. (a) | 8,500 | 76,245 | |
Reata Pharmaceuticals, Inc. (a)(b) | 64,600 | 2,115,004 | |
Roche Holding AG (participation certificate) | 162,876 | 61,686,618 | |
Royalty Pharma PLC | 874,500 | 34,332,870 | |
Sanofi SA sponsored ADR | 1,813,422 | 95,113,984 | |
UCB SA | 287,200 | 31,344,103 | |
Zoetis, Inc. Class A | 163,000 | 31,564,950 | |
Zogenix, Inc. (a) | 800 | 21,008 | |
746,050,636 | |||
TOTAL COMMON STOCKS | |||
(Cost $695,817,589) | 916,862,415 | ||
Convertible Preferred Stocks - 0.3% | |||
Biotechnology - 0.2% | |||
Biotechnology - 0.2% | |||
ValenzaBio, Inc. Series A (d)(e) | 224,708 | 1,451,614 | |
Diversified Financial Services - 0.1% | |||
Other Diversified Financial Services - 0.1% | |||
Paragon Biosciences Emalex Capital, Inc. Series C (d)(e) | 158,879 | 985,050 | |
Pharmaceuticals - 0.0% | |||
Pharmaceuticals - 0.0% | |||
Castle Creek Pharmaceutical Holdings, Inc. Series C (a)(d)(e) | 200 | 74,796 | |
Software - 0.0% | |||
Systems Software - 0.0% | |||
Evozyne LLC Series A (d)(e) | 5,900 | 100,182 | |
TOTAL CONVERTIBLE PREFERRED STOCKS | |||
(Cost $3,914,946) | 2,611,642 | ||
Principal Amount | Value | ||
Convertible Bonds - 0.0% | |||
Pharmaceuticals - 0.0% | |||
Pharmaceuticals - 0.0% | |||
Castle Creek Pharmaceutical Holdings, Inc. 0.13% (Cost $14,700)(d)(e)(f) | 14,700 | 14,700 | |
Shares | Value | ||
Money Market Funds - 1.9% | |||
Fidelity Cash Central Fund 0.07% (g) | 10,724,430 | 10,726,575 | |
Fidelity Securities Lending Cash Central Fund 0.07% (g)(h) | 7,038,432 | 7,039,136 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $17,765,711) | 17,765,711 | ||
TOTAL INVESTMENT IN SECURITIES - 100.3% | |||
(Cost $717,512,946) | 937,254,468 | ||
NET OTHER ASSETS (LIABILITIES) - (0.3)% | (2,506,552) | ||
NET ASSETS - 100% | $934,747,916 |
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 $7,832,525 or 0.8% of net assets.
(d) Level 3 security
(e) Restricted securities (including private placements) - 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 $2,626,342 or 0.3% of net assets.
(f) Security is perpetual in nature with no stated maturity date.
(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 |
Castle Creek Pharmaceutical Holdings, Inc. Series C | 12/9/19 | $82,370 |
Castle Creek Pharmaceutical Holdings, Inc. 0.13% | 6/28/21 | $14,700 |
Evozyne LLC Series A | 4/9/21 | $132,573 |
Paragon Biosciences Emalex Capital, Inc. Series C | 2/26/21 | $1,700,005 |
ValenzaBio, Inc. Series A | 3/25/21 | $1,999,998 |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $2,505,192 | $259,103,054 | $250,881,671 | $5,036 | $-- | $-- | $10,726,575 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 109,402,533 | 320,631,217 | 422,994,614 | 119,941 | -- | -- | 7,039,136 | 0.0% |
Total | $111,907,725 | $579,734,271 | $673,876,285 | $124,977 | $-- | $-- | $17,765,711 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $916,862,415 | $778,199,081 | $138,663,334 | $-- |
Convertible Preferred Stocks | 2,611,642 | -- | -- | 2,611,642 |
Convertible Bonds | 14,700 | -- | -- | 14,700 |
Money Market Funds | 17,765,711 | 17,765,711 | -- | -- |
Total Investments in Securities: | $937,254,468 | $795,964,792 | $138,663,334 | $2,626,342 |
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 | 53.5% |
United Kingdom | 12.5% |
France | 10.9% |
Switzerland | 9.6% |
Germany | 5.3% |
Belgium | 3.7% |
Ireland | 1.5% |
Netherlands | 1.1% |
Others (Individually Less Than 1%) | 1.9% |
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, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $6,895,297) — See accompanying schedule: Unaffiliated issuers (cost $699,747,235) | $919,488,757 | |
Fidelity Central Funds (cost $17,765,711) | 17,765,711 | |
Total Investment in Securities (cost $717,512,946) | $937,254,468 | |
Receivable for fund shares sold | 1,027,622 | |
Dividends receivable | 2,848,642 | |
Reclaims receivable | 1,795,933 | |
Distributions receivable from Fidelity Central Funds | 2,226 | |
Prepaid expenses | 3,345 | |
Other receivables | 171,807 | |
Total assets | 943,104,043 | |
Liabilities | ||
Payable to custodian bank | $2 | |
Payable for investments purchased | 60,778 | |
Payable for fund shares redeemed | 463,867 | |
Accrued management fee | 404,012 | |
Other affiliated payables | 146,437 | |
Other payables and accrued expenses | 242,603 | |
Collateral on securities loaned | 7,038,428 | |
Total liabilities | 8,356,127 | |
Net Assets | $934,747,916 | |
Net Assets consist of: | ||
Paid in capital | $707,847,188 | |
Total accumulated earnings (loss) | 226,900,728 | |
Net Assets | $934,747,916 | |
Net Asset Value, offering price and redemption price per share ($934,747,916 ÷ 41,486,314 shares) | $22.53 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $16,273,556 | |
Foreign tax reclaims | 971,806 | |
Income from Fidelity Central Funds (including $119,941 from security lending) | 124,977 | |
Income before foreign taxes withheld | 17,370,339 | |
Less foreign taxes withheld | (1,700,023) | |
Total income | 15,670,316 | |
Expenses | ||
Management fee | $4,463,742 | |
Transfer agent fees | 1,453,410 | |
Accounting fees | 290,960 | |
Custodian fees and expenses | 66,999 | |
Independent trustees' fees and expenses | 3,070 | |
Registration fees | 51,136 | |
Audit | 39,002 | |
Legal | 3,408 | |
Miscellaneous | 4,987 | |
Total expenses before reductions | 6,376,714 | |
Expense reductions | (19,133) | |
Total expenses after reductions | 6,357,581 | |
Net investment income (loss) | 9,312,735 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 66,601,045 | |
Foreign currency transactions | 6,942 | |
Total net realized gain (loss) | 66,607,987 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | (29,777,991) | |
Assets and liabilities in foreign currencies | (15,625) | |
Total change in net unrealized appreciation (depreciation) | (29,793,616) | |
Net gain (loss) | 36,814,371 | |
Net increase (decrease) in net assets resulting from operations | $46,127,106 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $9,312,735 | $9,601,491 |
Net realized gain (loss) | 66,607,987 | 75,654,169 |
Change in net unrealized appreciation (depreciation) | (29,793,616) | 69,300,533 |
Net increase (decrease) in net assets resulting from operations | 46,127,106 | 154,556,193 |
Distributions to shareholders | (87,692,898) | (72,330,079) |
Share transactions | ||
Proceeds from sales of shares | 223,427,519 | 263,105,559 |
Reinvestment of distributions | 83,261,883 | 68,862,070 |
Cost of shares redeemed | (163,755,378) | (345,098,612) |
Net increase (decrease) in net assets resulting from share transactions | 142,934,024 | (13,130,983) |
Total increase (decrease) in net assets | 101,368,232 | 69,095,131 |
Net Assets | ||
Beginning of period | 833,379,684 | 764,284,553 |
End of period | $934,747,916 | $833,379,684 |
Other Information | ||
Shares | ||
Sold | 9,855,327 | 11,435,481 |
Issued in reinvestment of distributions | 3,596,826 | 3,007,054 |
Redeemed | (6,801,557) | (14,811,031) |
Net increase (decrease) | 6,650,596 | (368,496) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Pharmaceuticals Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $23.92 | $21.71 | $21.07 | $18.82 | $18.11 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .27 | .27 | .29 | .29 | .27 |
Net realized and unrealized gain (loss) | .97 | 4.04 | 2.29 | 2.34 | .74 |
Total from investment operations | 1.24 | 4.31 | 2.58 | 2.63 | 1.01 |
Distributions from net investment income | (.28) | (.31) | (.31) | (.28) | (.25) |
Distributions from net realized gain | (2.35) | (1.79) | (1.64) | (.10) | (.05) |
Total distributions | (2.63) | (2.10) | (1.94)D | (.38) | (.30) |
Net asset value, end of period | $22.53 | $23.92 | $21.71 | $21.07 | $18.82 |
Total ReturnE | 5.15% | 20.46% | 12.06% | 14.15% | 5.61% |
Ratios to Average Net AssetsC,F,G | |||||
Expenses before reductions | .75% | .77% | .78% | .80% | .81% |
Expenses net of fee waivers, if any | .75% | .77% | .78% | .79% | .81% |
Expenses net of all reductions | .75% | .76% | .77% | .79% | .80% |
Net investment income (loss) | 1.10% | 1.13% | 1.36% | 1.48% | 1.44% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $934,748 | $833,380 | $764,285 | $747,604 | $744,563 |
Portfolio turnover rateH | 29% | 32% | 52% | 55% | 89% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
H Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2022
1. Organization.
Biotechnology Portfolio, Health Care Portfolio, Health Care Services Portfolio, Medical Technology and Devices 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.
Funds may 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
Based on its investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the investing fund. These strategies are consistent with the investment objectives of the investing fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the investing fund.
Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio(a) |
Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | Less than .005% |
(a) Expenses expressed as a percentage of average net assets and are as of each underlying Central Fund's most recent annual or semi-annual shareholder report.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which contain the significant accounting policies (including investment valuation policies) of those funds, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission website or upon request.
3. Significant Accounting Policies.
Each Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies. 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. Each Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. The following summarizes the significant accounting policies of each 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 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 – Unadjusted 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. 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. Securities, including private placements or other restricted securities, for which observable inputs are not available are valued using alternate valuation approaches, including the market approach, the income approach and cost approach, and are categorized as Level 3 in the hierarchy. The market approach considers factors including the price of recent investments in the same or a similar security or financial metrics of comparable securities. The income approach considers factors including expected future cash flows, security specific risks and corresponding discount rates. The cost approach considers factors including the value of the security's underlying assets and liabilities.
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 and preferred securities 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.
The following provides information on Level 3 securities held by the Fund that were valued at period end based on unobservable inputs. These amounts exclude valuations provided by a broker.
Biotechnology Portfolio:
Asset Type | Fair Value | Valuation Technique(s) | Unobservable Input | Amount or Range/Weighted Average | Impact to Valuation from an Increase in Input(a) |
Equities | $170,733,650 | Recovery value | Recovery value | 0.0% - 1.4% / 1.3% | Increase |
Discount for lack of marketability | 5.0% | Decrease | |||
Market approach | Transaction price | $2.42 - $105.86 / $51.08 | Increase | ||
Discount rate | 21.2% - 27.4% / 24.5% | Decrease | |||
Parity price | $0.05 | Increase | |||
Discounted cash flow | Discount rate | 8.0% - 13.0% / 12.3% | Decrease | ||
Weighted average cost of capital (WACC) | 25.0% | Decrease | |||
Discount for lack of marketability | 10.0% - 15.0% / 10.5% | Decrease | |||
Growth rate | 3.5% - 5.0% / 3.5% | Increase | |||
Probability rate | 0.6% - 50.0% / 20.2% | Increase |
(a) Represents the directional change in the fair value of the Level 3 investments that could have resulted from an increase in the corresponding input as of period end. A decrease to the unobservable input would have had the opposite effect. Significant changes in these inputs may have resulted in a significantly higher or lower fair value measurement at period end.
Health Care Portfolio:
Asset Type | Fair Value | Valuation Technique(s) | Unobservable Input | Amount or Range/Weighted Average | Impact to Valuation from an Increase in Input(a) |
Equities | $99,854,613 | Market comparable | Enterprise value/Revenue multiple (EV/S) | 3.8 | Increase |
Market approach | Transaction price | $6.00 - $92.68 / $22.76 | Increase | ||
Discount rate | 17.2% - 44.1% / 20.7% | Decrease | |||
Discounted cash flow | Discount rate | 10.0% | Decrease | ||
Weighted average cost of capital (WACC) | 25.0% | Decrease | |||
Discount for lack of marketability | 15.0% | Decrease | |||
Growth rate | 5.0% | Increase | |||
Probability rate | 0.6% - 37.3% / 16.3% | Increase |
(a) Represents the directional change in the fair value of the Level 3 investments that could have resulted from an increase in the corresponding input as of period end. A decrease to the unobservable input would have had the opposite effect. Significant changes in these inputs may have resulted in a significantly higher or lower fair value measurement at period end.
Medical Technology and Devices Portfolio:
Asset Type | Fair Value | Valuation Technique(s) | Unobservable Input | Amount or Range/Weighted Average | Impact to Valuation from an Increase in Input(a) |
Equities | $246,837,751 | Market comparable | Enterprise value/Revenue multiple (EV/S) | 3.8 | Increase |
Recovery value | Recovery value | 2.9% | Increase | ||
Transaction price | $12.76 | Increase | |||
Probability rate | 15.0% - 70.0% / 42.5% | Increase | |||
Market approach | Transaction price | $1.02 - $798.89 / $104.06 | Increase | ||
Discount rate | 17.2% - 44.1% / 19.4% | Decrease | |||
Premium rate | 8.2% | Increase | |||
Discounted cash flow | Weighted average cost of capital (WACC) | 25.0% | Decrease | ||
Discount for lack of marketability | 15.0% | Decrease | |||
Growth rate | 5.0% | Increase | |||
Preferred Securities | $19,551,861 | Market approach | Transaction price | $100.00 | Increase |
(a) Represents the directional change in the fair value of the Level 3 investments that could have resulted from an increase in the corresponding input as of period end. A decrease to the unobservable input would have had the opposite effect. Significant changes in these inputs may have resulted in a significantly higher or lower fair value measurement at period end.
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, 2022, as well as a roll forward of Level 3 investments, is included at the end of each Fund's Schedule of Investments.
Foreign Currency. Certain 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 for certain Funds include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends or foreign tax reclaims. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable or reclaims receivable.
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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. 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 certain Funds, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in affiliated mutual funds, are marked-to-market and remain in a fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees presented below are included in the accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, as applicable.
Biotechnology Portfolio | $1,182,781 |
Health Care Portfolio | 780,529 |
Health Care Services Portfolio | 87,860 |
Medical Technology and Devices Portfolio | 258,872 |
Pharmaceuticals Portfolio | 159,455 |
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, 2022, 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. These differences resulted in distribution reclassifications. 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), deferred trustees compensation, net operating losses and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows for each Fund:
Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) | |
Biotechnology Portfolio | $5,224,914,049 | $1,549,471,328 | $(1,004,705,209) | $544,766,119 |
Health Care Portfolio | 6,561,286,369 | 3,390,994,024 | (796,067,097) | 2,594,926,927 |
Health Care Services Portfolio | 642,511,545 | 666,336,755 | (56,602,153) | 609,734,602 |
Medical Technology and Devices Portfolio | 5,576,379,315 | 3,657,814,087 | (303,939,825) | 3,353,874,262 |
Pharmaceuticals Portfolio | 720,541,131 | 281,194,376 | (64,481,039) | 216,713,337 |
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 | |
Biotechnology Portfolio | $– | $– | $544,806,863 |
Health Care Portfolio | – | 185,063,001 | 2,595,323,050 |
Health Care Services Portfolio | 2,699,747 | 55,488,165 | 609,732,857 |
Medical Technology and Devices Portfolio | – | 137,590,547 | 3,353,876,012 |
Pharmaceuticals Portfolio | 2,253,445 | 8,016,947 | 216,779,748 |
Certain of the Funds intend to elect to defer to the next fiscal year capital losses recognized during the period November 1, 2021 to February 28, 2022, and ordinary losses recognized during the period January 1, 2022 to February 28, 2022. Loss deferrals were as follows:
Capital losses | Ordinary losses | |
Biotechnology Portfolio | $(98,907,002) | $(11,118,831) |
Health Care Portfolio | – | (4,977,672) |
Medical Technology and Devices Portfolio | (87,545,004) | (8,394,767) |
The tax character of distributions paid was as follows:
February 28, 2022 | |||
Ordinary Income | Long-term Capital Gains | Total | |
Biotechnology Portfolio | $44,710,367 | $906,920,364 | $951,630,731 |
Health Care Portfolio | 30,213,050 | 899,646,185 | 929,859,235 |
Health Care Services Portfolio | 2,649,600 | 84,975,790 | 87,625,390 |
Medical Technology and Devices Portfolio | 80,106,652 | 728,218,712 | 808,325,364 |
Pharmaceuticals Portfolio | 14,327,993 | 73,364,905 | 87,692,898 |
February 28, 2021 | |||
Ordinary Income | Long-term Capital Gains | Total | |
Biotechnology Portfolio | $153,648,169 | $1,349,606,527 | $1,503,254,696 |
Health Care Portfolio | 180,426,644 | 862,893,285 | 1,043,319,929 |
Health Care Services Portfolio | 9,375,003 | – | 9,375,003 |
Medical Technology and Devices Portfolio | 5,369,657 | 508,939,963 | 514,309,620 |
Pharmaceuticals Portfolio | 23,917,701 | 48,412,378 | 72,330,079 |
Restricted Securities (including Private Placements). 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 held at period end is included at the end of the Schedule of Investments, if applicable.
Special Purpose Acquisition Companies. Funds may invest in stock, warrants, and other securities of special purpose acquisition companies (SPACs) or similar special purpose entities. A SPAC is a publicly traded company that raises investment capital via an initial public offering (IPO) for the purpose of acquiring the equity securities of one or more existing companies via merger, business combination, acquisition or other similar transactions within a designated time frame.
Private Investment in Public Equity. Funds may acquire equity securities of an issuer through a private investment in a public equity (PIPE) transaction, including through commitments to purchase securities on a when-issued basis. A PIPE typically involves the purchase of securities directly from a publicly traded company in a private placement transaction. Securities purchased through PIPE transactions will be restricted from trading and considered illiquid until a resale registration statement for the shares is filed and declared effective.
At the current and/or prior period end, Health Care Portfolio, Health Care Services Portfolio and Medical Technology and Devices Portfolio had commitments to purchase when-issued securities through PIPE transactions with SPACs. The commitments are contingent upon the SPACs acquiring the securities of target companies. Unrealized appreciation (depreciation) on any commitments outstanding at period end is separately presented in the Statements of Assets and Liabilities as Unrealized appreciation (depreciation) on unfunded commitments, and any change in unrealized appreciation (depreciation) on unfunded commitments during the period is separately presented in the Statement of Operations, as applicable.
Consolidated Subsidiary. The Funds included in the table below hold certain investments through a wholly-owned subsidiary ("Subsidiary"), which may be subject to federal and state taxes upon disposition.
As of period end, investments in Subsidiaries were as follows:
$ Amount | % of Net Assets | |
Biotechnology Portfolio | 82,656,123 | 1.57 |
Health Care Portfolio | 13,584,368 | .15 |
Health Care Services Portfolio | 1,998,863 | .16 |
The financial statements have been consolidated to include the Subsidiary accounts where applicable. Accordingly, all inter-company transactions and balances have been eliminated.
At period end, any estimated tax liability for these investments is presented as "Deferred taxes" in the Statement of Assets and Liabilities and included in "Change in net unrealized appreciation (depreciation) on investment securities" in the Statement of Operations. The tax liability incurred may differ materially depending on conditions when these investments are disposed. Any cash held by a Subsidiary is restricted as to its use and is presented as "Restricted cash" in the Statement of Assets and Liabilities, if applicable.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, as applicable, are noted in the table below.
Purchases ($) | Sales ($) | |
Biotechnology Portfolio | 3,385,065,940 | 4,616,250,588 |
Health Care Portfolio | 3,238,989,292 | 4,294,139,632 |
Health Care Services Portfolio | 421,860,355 | 494,500,243 |
Medical Technology and Devices Portfolio | 3,132,241,546 | 3,188,589,000 |
Pharmaceuticals Portfolio | 308,190,781 | 248,648,291 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company 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 monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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% | .22% | .52% |
Health Care Portfolio | .30% | .22% | .52% |
Health Care Services Portfolio | .30% | .22% | .52% |
Medical Technology and Devices Portfolio | .30% | .22% | .52% |
Pharmaceuticals Portfolio | .30% | .22% | .52% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (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 | .14% |
Health Care Portfolio | .14% |
Health Care Services Portfolio | .14% |
Medical Technology and Devices Portfolio | .14% |
Pharmaceuticals Portfolio | .17% |
Accounting 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. For the period, the fees were equivalent to the following annual rates:
% of Average Net Assets | |
Biotechnology Portfolio | .02 |
Health Care Portfolio | .01 |
Health Care Services Portfolio | .03 |
Medical Technology and Devices Portfolio | .01 |
Pharmaceuticals Portfolio | .03 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 | $176,611 |
Health Care Portfolio | 76,494 |
Health Care Services Portfolio | 11,771 |
Medical Technology and Devices Portfolio | 57,560 |
Pharmaceuticals Portfolio | 4,601 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), each Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing each Fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. 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 | $9,334,000 | .31% | $482 |
Health Care Services Portfolio | Borrower | 4,077,500 | .32% | 145 |
Medical Technology and Devices Portfolio | Borrower | 12,746,478 | .31% | 2,557 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
Biotechnology Portfolio | 201,617,678 | 156,021,784 | 5,789,517 |
Health Care Portfolio | 317,110,578 | 254,706,143 | 46,451,073 |
Health Care Services Portfolio | 17,934,204 | 29,172,642 | 6,137,776 |
Medical Technology and Devices Portfolio | 221,862,970 | 177,075,319 | 22,914,685 |
Pharmaceuticals Portfolio | 13,359,959 | 18,450,576 | 3,148,511 |
Other. During the period, the investment adviser reimbursed the Funds for certain losses as follows:
Amount ($) | |
Health Care Portfolio | 6,255 |
Medical Technology and Devices Portfolio | 59,486 |
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 listed below. During the period, there were no borrowings on this line of credit.
Amount | |
Biotechnology Portfolio | $13,907 |
Health Care Portfolio | 18,216 |
Health Care Services Portfolio | 2,056 |
Medical Technology and Devices Portfolio | 16,410 |
Pharmaceuticals Portfolio | 1,452 |
7. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the 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. Affiliated security lending activity, if any, was as follows:
Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
Biotechnology Portfolio | $322,073 | $136,093 | $1,211,670 |
Health Care Portfolio | 42,302 | 1,082 | 774,380 |
Health Care Services Portfolio | 10,891 | 7,822 | 17,882 |
Medical Technology and Devices Portfolio | 22,435 | 4,301 | – |
Pharmaceuticals Portfolio | 12,449 | 265 | 166,668 |
8. Expense Reductions.
Through arrangements with each applicable Fund's custodian and transfer agent, 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.
Custodian credits | |
Biotechnology Portfolio | $117 |
Medical Technology and Devices Portfolio | 154 |
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses as follows:
Amount | |
Biotechnology Portfolio | $172,438 |
Health Care Portfolio | 242,142 |
Health Care Services Portfolio | 27,859 |
Medical Technology and Devices Portfolio | 229,608 |
Pharmaceuticals Portfolio | 19,133 |
9. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a fund. The risk of material loss from such claims is considered remote.
10. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Funds' performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and the Shareholders of Biotechnology Portfolio, Health Care Portfolio, Health Care Services Portfolio, Medical Technology and Devices Portfolio and Pharmaceuticals Portfolio
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Biotechnology Portfolio, Health Care Portfolio, Health Care Services Portfolio, Medical Technology and Devices Portfolio, and Pharmaceuticals Portfolio (five of the funds constituting Fidelity Select Portfolios, hereafter collectively referred to as the “Funds”) as of February 28, 2022, the related statements of operations for the year ended February 28, 2022, the statements of changes in net assets for each of the two years in the period ended February 28, 2022, including the related notes, and the financial highlights for each of the five years in the period ended February 28, 2022 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of February 28, 2022, 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 ended February 28, 2022 and each of the financial highlights for each of the five years in the period ended February 28, 2022 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 28, 2022 by correspondence with the custodians, issuers of privately offered securities 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 opinions.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
April 12, 2022
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
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 317 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. Robert A. Lawrence is an interested person and currently serves as Acting 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. David M. Thomas serves as Lead Independent Trustee 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 high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the funds' Board. 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 FMR 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 FMR, 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, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. 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+
Bettina Doulton (1964)
Year of Election or Appointment: 2020
Trustee
Ms. Doulton also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Doulton served in a variety of positions at Fidelity Investments, including as a managing director of research (2006-2007), portfolio manager to certain Fidelity® funds (1993-2005), equity analyst and portfolio assistant (1990-1993), and research assistant (1987-1990). Ms. Doulton currently owns and operates Phi Builders + Architects and Cellardoor Winery. Previously, Ms. Doulton served as a member of the Board of Brown Capital Management, LLC (2014-2018).
Robert A. Lawrence (1952)
Year of Election or Appointment: 2020
Trustee
Acting Chairman of the Board of Trustees
Mr. Lawrence also serves as Trustee of other funds. Previously, Mr. Lawrence served as a Member of the Advisory Board of certain funds. Prior to his retirement in 2008, Mr. Lawrence served as Vice President of certain Fidelity® funds (2006-2008), Senior Vice President, Head of High Income Division of Fidelity Management & Research Company (investment adviser firm, 2006-2008), and President of Fidelity Strategic Investments (investment adviser firm, 2002-2005).
* 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 FMR.
+ 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+
Thomas P. Bostick (1956)
Year of Election or Appointment: 2021
Trustee
Lieutenant General Bostick also serves as Trustee of other Fidelity® funds. Prior to his retirement, General Bostick (United States Army, Retired) held a variety of positions within the U.S. Army, including Commanding General and Chief of Engineers, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff and Director of Human Resources, U.S. Army (2009-2012). General Bostick currently serves as a member of the Board and Finance and Governance Committees of CSX Corporation (transportation, 2020-present) and a member of the Board and Corporate Governance and Nominating Committee of Perma-Fix Environmental Services, Inc. (nuclear waste management, 2020-present). General Bostick serves as Chief Executive Officer of Bostick Global Strategies, LLC (consulting, 2016-present) and as a member of the Board of HireVue, Inc. (video interview and assessment, 2020-present). Previously, General Bostick served as a Member of the Advisory Board of certain Fidelity® funds (2021), President, Intrexon Bioengineering (2018-2020) and Chief Operating Officer (2017-2020) and Senior Vice President of the Environment Sector (2016-2017) of Intrexon Corporation (biopharmaceutical company).
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 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 currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York and a member of the Board of The Leadership Academy (previously NYC Leadership Academy) (2012-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Vicki L. Fuller (1957)
Year of Election or Appointment: 2020
Trustee
Ms. Fuller also serves as Trustee of other Fidelity® funds. Previously, Ms. Fuller served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of two Blackstone business development companies (2020-present), as a member of the Board of Treliant, LLC (consulting, 2019-present), as a member of the Advisory Board of Ariel Alternatives, LLC (private equity, 2021-present) and as a member of the Board and Chair of the Audit Committee of Gusto, Inc. (software, 2021-present). In addition, Ms. Fuller currently serves as a member of the Board of Roosevelt University (2019-present) and as a member of the Executive Board of New York University’s Stern School of Business. Ms. Fuller previously served as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-2021).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Trustee
Ms. Kampling also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Finance Committee and Governance, Compensation and Nominating Committee of Xcel Energy Inc. (utilities company, 2020-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee and Chair of the Executive Development and Compensation Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a Member of the Advisory Board of certain Fidelity® funds (2020), a member of the Board, Compensation Committee and Executive Committee and Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-2021), a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Thomas A. Kennedy (1955)
Year of Election or Appointment: 2021
Trustee
Mr. Kennedy also serves as Trustee of other Fidelity® funds. Previously, Mr. Kennedy served as a Member of the Advisory Board of certain Fidelity® funds (2020) and held a variety of positions at Raytheon Company (aerospace and defense, 1983-2020), including Chairman and Chief Executive Officer (2014-2020) and Executive Vice President and Chief Operating Officer (2013-2014). Mr. Kennedy currently serves as Executive Chairman of the Board of Directors of Raytheon Technologies Corporation (aerospace and defense, 2020-present). He is also a member of the Rutgers School of Engineering Industry Advisory Board (2011-present) and a member of the UCLA Engineering Dean’s Executive Board (2016-present).
Oscar Munoz (1959)
Year of Election or Appointment: 2021
Trustee
Mr. Munoz also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Munoz served as Executive Chairman (2020-2021), Chief Executive Officer (2015-2020), President (2015-2016) and a member of the Board (2010-2021) of United Airlines Holdings, Inc. Mr. Munoz currently serves as a member of the Board of CBRE Group, Inc. (commercial real estate, 2020-present), a member of the Board of Univision Communications, Inc. (Hispanic media, 2020-present) and a member of the Advisory Board of Salesforce.com, Inc. (cloud-based software, 2020-present). Previously, Mr. Munoz served as a Member of the Advisory Board of certain Fidelity® funds (2021).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Lead Independent Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as a member of the Board of Fortune Brands Home and Security (home and security products, 2004-present) and as Director (2013-present) and Non-Executive Chairman of the Board (2022-present) of Interpublic Group of Companies, Inc. (marketing communication).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Trustee
Ms. Tomasky also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Executive Committee, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present) and as a member of the Board of its subsidiary company, Public Service Electric and Gas Co. (2021-present). In addition, Ms. Tomasky currently serves as a member (2009-present) and President (2020-present) of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board and Kenyon in the World Committee of Kenyon College (2016-present). Previously, Ms. Tomasky served as a Member of the Advisory Board of certain Fidelity® funds (2020), as a member of the Board of the Columbus Regional Airport Authority (2007-2020), as a member of the Board (2011-2018) and Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee of other Fidelity® funds. Previously, Mr. Wiley served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley also previously served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018), a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018) and a member of the Board of High Point Resources (exploration and production, 2005-2020).
+ 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 (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as an officer of other funds. Mr. Brown serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
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 Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as an officer of other funds. Mr. Davis serves as Assistant Treasurer of FIMM, LLC (2021-present), FMR Capital, Inc. (2017-present), FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); 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).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2017-present). Previously, Ms. Del Prato served as President and Treasurer of The North Carolina Capital Management Trust: Cash Portfolio and Term Portfolio (2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present); Secretary of FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); and Assistant Secretary of FIMM, LLC (2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); 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).
Jason P. Pogorelec (1975)
Year of Election or Appointment: 2020
Chief Compliance Officer
Mr. Pogorelec also serves as Chief Compliance Officer of other funds. Mr. Pogorelec is a senior Vice President of Asset Management Compliance for Fidelity Investments and is an employee of Fidelity Investments (2006-present). Previously, Mr. Pogorelec served as Vice President, Associate General Counsel for Fidelity Investments (2010-2020) and Assistant Secretary of certain Fidelity funds (2015-2020).
Brett Segaloff (1972)
Year of Election or Appointment: 2021
Anti-Money Laundering (AML) Officer
Mr. Segaloff also serves as an AML Officer of other funds and other related entities. He is Director, Anti-Money Laundering (2007-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments (1996-present).
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), 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 Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as an officer of other funds. Mr. Wegmann serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2011-present). Previously, Mr. Wegmann served as Assistant Treasurer of certain Fidelity® funds (2019-2021).
Shareholder Expense Example
As a shareholder, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or redemption proceeds, as applicable and (2) ongoing costs, which generally include 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 a 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, 2021 to February 28, 2022).
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 for a class/Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If any fund is a shareholder of any underlying mutual funds or exchange-traded funds (ETFs) (the Underlying Funds), such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses incurred presented in the table. These fees and expenses are not included in the 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 actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the 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. If any fund is a shareholder of any Underlying Funds, such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses as presented in the table. These fees and expenses are not included in the 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, 2021 | Ending Account Value February 28, 2022 | Expenses Paid During Period-B September 1, 2021 to February 28, 2022 | |
Biotechnology Portfolio | .69% | |||
Actual | $1,000.00 | $710.40 | $2.93 | |
Hypothetical-C | $1,000.00 | $1,021.37 | $3.46 | |
Health Care Portfolio | .67% | |||
Actual | $1,000.00 | $868.00 | $3.10 | |
Hypothetical-C | $1,000.00 | $1,021.47 | $3.36 | |
Health Care Services Portfolio | .70% | |||
Actual | $1,000.00 | $1,043.00 | $3.55 | |
Hypothetical-C | $1,000.00 | $1,021.32 | $3.51 | |
Medical Technology and Devices Portfolio | .68% | |||
Actual | $1,000.00 | $840.60 | $3.10 | |
Hypothetical-C | $1,000.00 | $1,021.42 | $3.41 | |
Pharmaceuticals Portfolio | .75% | |||
Actual | $1,000.00 | $934.90 | $3.60 | |
Hypothetical-C | $1,000.00 | $1,021.08 | $3.76 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/ 365 (to reflect the one-half year period). The fees and expenses of any Underlying Funds are not included in each annualized expense ratio.
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 | 04/11/2022 | 04/08/2022 | $0.000 | $0.000 |
Health Care Portfolio | 04/11/2022 | 04/08/2022 | $0.000 | $0.589 |
Health Care Services Portfolio | 04/11/2022 | 04/08/2022 | $0.000 | $6.103 |
Medical Technology and Devices Portfolio | 04/11/2022 | 04/08/2022 | $0.000 | $1.109 |
Pharmaceuticals Portfolio | 04/11/2022 | 04/08/2022 | $0.056 | $0.200 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2022, or, if subsequently determined to be different, the net capital gain of such year.
Biotechnology Portfolio | $381,890,228 |
Health Care Portfolio | $822,565,235 |
Health Care Services Portfolio | $110,141,113 |
Medical Technology and Devices Portfolio | $566,686,000 |
Pharmaceuticals Portfolio | $65,481,079 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
Biotechnology Portfolio | |
April 2021 | 27% |
December 2021 | –% |
Health Care Portfolio | |
April 2021 | 7% |
December 2021 | –% |
Health Care Services Portfolio | |
April 2021 | 100% |
December 2021 | 100% |
Medical Technology and Devices Portfolio | |
April 2021 | 16% |
December 2021 | –% |
Pharmaceuticals Portfolio | |
April 2021 | 4% |
December 2021 | 72% |
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.
Biotechnology Portfolio | |
April 2021 | 26% |
December 2021 | –% |
Health Care Portfolio | |
April 2021 | 28% |
December 2021 | –% |
Health Care Services Portfolio | |
April 2021 | 100% |
December 2021 | 100% |
Medical Technology and Devices Portfolio | |
April 2021 | 19% |
December 2021 | –% |
Pharmaceuticals Portfolio | |
April 2021 | 16% |
December 2021 | 100% |
The funds hereby designate the percentages noted below of the short-term capital gain dividends distributed during the fiscal year as qualifying to be taxed as short-term capital gain dividends for nonresident alien shareholders:
April, 2021 | |
Biotechnology Portfolio | 100% |
Health Care Portfolio | 100% |
Health Care Services Portfolio | –% |
Medical Technology and Devices Portfolio | 100% |
Pharmaceuticals Portfolio | 100% |
The funds will notify shareholders in January 2023 of amounts for use in preparing 2022 income tax returns.
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Funds have adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage each Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. Each Fund’s Board of Trustees (the Board) has designated each Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2020 through November 30, 2021. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
SELHC-ANN-0422
1.813640.117
Fidelity® Select Portfolios®
Industrials Sector
Defense and Aerospace Portfolio
Industrials Portfolio
Transportation Portfolio
February 28, 2022
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Contents
Defense and Aerospace Portfolio | |
Industrials Portfolio | |
Transportation Portfolio | |
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. © 2022 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-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT 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.
Note to Shareholders:
Early in 2020, the outbreak and spread of COVID-19 emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread. The pandemic prompted a number of measures to limit the spread of COVID-19, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. To help stem the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
In general, the overall impact of the pandemic lessened in 2021, amid a resilient economy and widespread distribution of three COVID-19 vaccines granted emergency use authorization from the U.S. Food and Drug Administration (FDA) early in the year. Still, the situation remains dynamic, and the extent and duration of its influence on financial markets and the economy is highly uncertain, due in part to a recent spike in cases based on highly contagious variants of the coronavirus.
Extreme events such as the COVID-19 crisis are exogenous shocks that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets. Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we continue to take extra steps to be responsive to customer needs. We encourage you to visit us online, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Defense and Aerospace Portfolio | 14.06% | 10.20% | 12.80% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Defense and Aerospace Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789797509_740.jpg)
Period Ending Values | ||
$33,351 | Defense and Aerospace Portfolio | |
$39,037 | S&P 500® Index |
Defense and Aerospace Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Co-Managers Clayton Pfannenstiel and Chad Colman: For the fiscal year ending February 28, 2022, the fund gained 14.06%, underperforming the 19.09% advance of the MSCI U.S. IMI Aerospace & Defense 25/50 Linked Index, as well as the broad-based S&P 500® index. Versus the industry index, security selection in the fund’s core aerospace & defense category was the primary detractor. Out-of-index exposure to industrial machinery and systems software hampered the fund's relative result to a much lesser extent. The fund's biggest individual relative detractor was an underweighting in Raytheon Technologies, which gained 46% the past year. The company was among the fund's largest holdings on February 28. Also hampering performance was our outsized stake in Kratos Defense & Security Solutions, which generated a roughly -23% result, though we reduced our exposure to the stock the past 12 months. Further weighing on the portfolio’s relative result was an outsized position in Boeing (-3%), which was our largest holding at the end of the period. In contrast, non-index choices in the trading companies & distributors group contributed the most to performance versus the industry index. An underweighting among aerospace & defense stocks, as well as out-of-index exposure to research & consulting services, also lifted the fund's relative result. The portfolio's biggest individual relative contributor was a smaller-than-index stake in Virgin Galactic, which returned -74% the past year and was no longer held at period end. Also bolstering performance was an overweight position in Northrop Grumman, which gained 53% and was among the fund's largest holdings. Another key relative contributor this period was our underweighting in Axon Enterprise (-15%).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 27, 2021, Clayton Pfannenstiel and Chad Colman assumed co-management responsibilities for the fund, joining Co-Manager Jonathan Siegmann. On January 1, 2022, Jonathan Siegmann came off of the fund.Defense and Aerospace Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
The Boeing Co. | 17.0 |
Lockheed Martin Corp. | 14.2 |
Raytheon Technologies Corp. | 13.7 |
Northrop Grumman Corp. | 5.0 |
TransDigm Group, Inc. | 4.7 |
Howmet Aerospace, Inc. | 4.6 |
HEICO Corp. Class A | 4.0 |
L3Harris Technologies, Inc. | 3.8 |
General Dynamics Corp. | 2.7 |
Airbus Group NV | 2.7 |
72.4 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Aerospace & Defense | 92.9% | |
Professional Services | 3.0% | |
Electronic Equipment & Components | 2.4% | |
Diversified Financial Services | 0.4% | |
All Others* | 1.3% |
* Includes short-term investments and net other assets (liabilities).
Defense and Aerospace Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 98.7% | |||
Shares | Value | ||
Aerospace & Defense - 92.9% | |||
Aerospace & Defense - 92.9% | |||
AerSale Corp. (a) | 409,000 | $6,404,940 | |
Airbus Group NV | 325,000 | 41,495,715 | |
Axon Enterprise, Inc. (a) | 60,800 | 8,527,200 | |
BWX Technologies, Inc. | 466,900 | 24,941,798 | |
Curtiss-Wright Corp. | 102,000 | 15,047,040 | |
Elbit Systems Ltd. (b) | 83,600 | 17,226,616 | |
General Dynamics Corp. | 178,500 | 41,849,325 | |
HEICO Corp. Class A | 505,000 | 62,074,600 | |
Howmet Aerospace, Inc. | 1,987,800 | 71,401,776 | |
Huntington Ingalls Industries, Inc. | 159,300 | 32,560,920 | |
Kratos Defense & Security Solutions, Inc. (a) | 924,700 | 19,344,724 | |
L3Harris Technologies, Inc. | 228,800 | 57,728,528 | |
Lockheed Martin Corp. | 502,800 | 218,114,640 | |
Maxar Technologies, Inc. (b) | 674,000 | 21,864,560 | |
Mercury Systems, Inc. (a) | 402,000 | 24,208,440 | |
Mynaric AG ADR | 51,639 | 550,988 | |
Northrop Grumman Corp. | 173,900 | 76,888,146 | |
Raytheon Technologies Corp. | 2,049,400 | 210,473,380 | |
Spirit AeroSystems Holdings, Inc. Class A | 662,600 | 33,130,000 | |
Textron, Inc. | 550,400 | 40,250,752 | |
The Boeing Co. (a) | 1,272,600 | 261,315,684 | |
TransDigm Group, Inc. (a) | 108,800 | 72,524,992 | |
Triumph Group, Inc. (a) | 1,397,500 | 34,993,400 | |
Vectrus, Inc. (a) | 84,244 | 3,861,745 | |
Woodward, Inc. | 250,100 | 31,169,963 | |
1,427,949,872 | |||
Diversified Financial Services - 0.4% | |||
Other Diversified Financial Services - 0.4% | |||
Tailwind Two Acquisition Corp. Class A (a) | 600,000 | 5,952,000 | |
Electronic Equipment & Components - 2.4% | |||
Electronic Equipment & Instruments - 2.4% | |||
Teledyne Technologies, Inc. (a) | 84,200 | 36,153,796 | |
Professional Services - 3.0% | |||
Research & Consulting Services - 3.0% | |||
Booz Allen Hamilton Holding Corp. Class A | 272,200 | 21,963,818 | |
CACI International, Inc. Class A (a) | 83,900 | 23,474,381 | |
45,438,199 | |||
TOTAL COMMON STOCKS | |||
(Cost $1,023,179,469) | 1,515,493,867 | ||
Money Market Funds - 1.9% | |||
Fidelity Cash Central Fund 0.07% (c) | 10,250,161 | 10,252,211 | |
Fidelity Securities Lending Cash Central Fund 0.07% (c)(d) | 19,273,431 | 19,275,358 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $29,527,569) | 29,527,569 | ||
TOTAL INVESTMENT IN SECURITIES - 100.6% | |||
(Cost $1,052,707,038) | 1,545,021,436 | ||
NET OTHER ASSETS (LIABILITIES) - (0.6)% | (8,490,307) | ||
NET ASSETS - 100% | $1,536,531,129 |
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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $6,176,790 | $185,958,567 | $181,883,146 | $1,682 | $-- | $-- | $10,252,211 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 12,101,306 | 247,118,724 | 239,944,672 | 233,064 | -- | -- | 19,275,358 | 0.1% |
Total | $18,278,096 | $433,077,291 | $421,827,818 | $234,746 | $-- | $-- | $29,527,569 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $1,515,493,867 | $1,473,998,152 | $41,495,715 | $-- |
Money Market Funds | 29,527,569 | 29,527,569 | -- | -- |
Total Investments in Securities: | $1,545,021,436 | $1,503,525,721 | $41,495,715 | $-- |
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, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $21,420,356) — See accompanying schedule: Unaffiliated issuers (cost $1,023,179,469) | $1,515,493,867 | |
Fidelity Central Funds (cost $29,527,569) | 29,527,569 | |
Total Investment in Securities (cost $1,052,707,038) | $1,545,021,436 | |
Receivable for investments sold | 1,716,675 | |
Receivable for fund shares sold | 7,469,506 | |
Dividends receivable | 3,079,456 | |
Distributions receivable from Fidelity Central Funds | 2,019 | |
Prepaid expenses | 12,612 | |
Other receivables | 140,349 | |
Total assets | 1,557,442,053 | |
Liabilities | ||
Payable for fund shares redeemed | $595,708 | |
Accrued management fee | 623,788 | |
Other affiliated payables | 251,434 | |
Other payables and accrued expenses | 164,494 | |
Collateral on securities loaned | 19,275,500 | |
Total liabilities | 20,910,924 | |
Net Assets | $1,536,531,129 | |
Net Assets consist of: | ||
Paid in capital | $922,238,910 | |
Total accumulated earnings (loss) | 614,292,219 | |
Net Assets | $1,536,531,129 | |
Net Asset Value, offering price and redemption price per share ($1,536,531,129 ÷ 89,975,151 shares) | $17.08 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $12,644,773 | |
Income from Fidelity Central Funds (including $233,064 from security lending) | 234,746 | |
Total income | 12,879,519 | |
Expenses | ||
Management fee | $8,510,715 | |
Transfer agent fees | 2,859,470 | |
Accounting fees | 503,025 | |
Custodian fees and expenses | 14,054 | |
Independent trustees' fees and expenses | 6,034 | |
Registration fees | 36,358 | |
Audit | 39,637 | |
Legal | 1,200 | |
Interest | 291 | |
Miscellaneous | 12,346 | |
Total expenses before reductions | 11,983,130 | |
Expense reductions | (36,500) | |
Total expenses after reductions | 11,946,630 | |
Net investment income (loss) | 932,889 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 353,138,300 | |
Foreign currency transactions | (12,362) | |
Total net realized gain (loss) | 353,125,938 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | (141,501,721) | |
Assets and liabilities in foreign currencies | (2,541) | |
Total change in net unrealized appreciation (depreciation) | (141,504,262) | |
Net gain (loss) | 211,621,676 | |
Net increase (decrease) in net assets resulting from operations | $212,554,565 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $932,889 | $(5,434,899) |
Net realized gain (loss) | 353,125,938 | (89,410,294) |
Change in net unrealized appreciation (depreciation) | (141,504,262) | (50,492,112) |
Net increase (decrease) in net assets resulting from operations | 212,554,565 | (145,337,305) |
Distributions to shareholders | (114,456,735) | (52,505,082) |
Share transactions | ||
Proceeds from sales of shares | 116,915,674 | 299,665,979 |
Reinvestment of distributions | 107,992,135 | 49,624,011 |
Cost of shares redeemed | (424,668,107) | (1,242,213,028) |
Net increase (decrease) in net assets resulting from share transactions | (199,760,298) | (892,923,038) |
Total increase (decrease) in net assets | (101,662,468) | (1,090,765,425) |
Net Assets | ||
Beginning of period | 1,638,193,597 | 2,728,959,022 |
End of period | $1,536,531,129 | $1,638,193,597 |
Other Information | ||
Shares | ||
Sold | 6,800,815 | 21,539,155 |
Issued in reinvestment of distributions | 7,086,098 | 3,901,259 |
Redeemed | (24,520,122) | (89,147,504) |
Net increase (decrease) | (10,633,209) | (63,707,090) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Defense and Aerospace Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B | 2018 B |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $16.28 | $16.61 | $17.27 | $18.45 | $13.83 |
Income from Investment Operations | |||||
Net investment income (loss)C,D | .01 | (.04) | .27E | .11 | .09F |
Net realized and unrealized gain (loss) | 2.12 | .06G | (.45) | .33 | 5.14 |
Total from investment operations | 2.13 | .02 | (.18) | .44 | 5.23 |
Distributions from net investment income | – | (.05) | (.22) | (.10) | (.07) |
Distributions from net realized gain | (1.33) | (.30) | (.26) | (1.52) | (.54) |
Total distributions | (1.33) | (.35) | (.48) | (1.62) | (.61) |
Net asset value, end of period | $17.08 | $16.28 | $16.61 | $17.27 | $18.45 |
Total ReturnH | 14.06% | .69% | (1.32)% | 3.57% | 38.46% |
Ratios to Average Net AssetsD,I,J | |||||
Expenses before reductions | .74% | .77% | .75% | .75% | .76% |
Expenses net of fee waivers, if any | .74% | .77% | .74% | .75% | .76% |
Expenses net of all reductions | .74% | .76% | .74% | .75% | .76% |
Net investment income (loss) | .06% | (.29)% | 1.49%E | .66% | .58%F |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $1,536,531 | $1,638,194 | $2,728,959 | $2,795,259 | $3,073,789 |
Portfolio turnover rateK | 52% | 30% | 40% | 44% | 32% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on August 10, 2018.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.18 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .48%.
F Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.07 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .14%.
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 returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
I Fees and expenses of any underlying mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
K Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Industrials Portfolio | 9.33% | 8.47% | 10.73% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Industrials Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789799423_740.jpg)
Period Ending Values | ||
$27,718 | Industrials Portfolio | |
$39,037 | S&P 500® Index |
Industrials Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Janet Glazer: For the fiscal year ending February 28, 2022, the fund gained 9.33%, outperforming the 8.84% advance of the MSCI U.S. IMI Industrials 25/50 Linked Index, but underperforming the broad-based S&P 500® index. Versus the sector index, security selection was the primary contributor, especially in the industrial conglomerates category. Security selection in electrical components & equipment and an underweighting in aerospace & defense also bolstered the fund's relative result. The fund's largest individual relative contributor was our overweighting in Herc Holdings, which gained roughly 67%. This is a position we established in this period. Also bolstering performance was our outsized stake in Roper Technologies, which gained 19%. The company was the fund's largest holding. Another notable relative contributor was an overweighting in Triumph Group (+62%), which was one of our biggest holdings at period end. Conversely, the primary detractor from performance versus the sector index was stock selection in aerospace & defense. Security selection and an underweighting in research & consulting services and an underweighting in air freight & logistics also hampered relative performance. The fund's largest individual relative detractor was an underweighting in United Parcel Service, which gained about 36% the past year. United Parcel Service was not held at period end. Also hampering performance was our outsized stake in Zurn Water Solutions, which returned -45%. This was a position we established the past 12 months. Avoiding Lockheed Martin, an index component that gained 35%, also hurt relative performance. Notable changes in positioning include a higher allocation to the aerospace & defense and railroads subindustries.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, 2022
% of fund's net assets | |
Roper Technologies, Inc. | 11.2 |
Crane Co. | 6.2 |
Willscot Mobile Mini Holdings | 5.7 |
AMETEK, Inc. | 5.5 |
Ingersoll Rand, Inc. | 5.4 |
Howmet Aerospace, Inc. | 5.3 |
Fortive Corp. | 5.0 |
The Boeing Co. | 4.6 |
Triumph Group, Inc. | 4.5 |
TransDigm Group, Inc. | 4.4 |
57.8 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Aerospace & Defense | 29.6% | |
Machinery | 18.0% | |
Industrial Conglomerates | 14.5% | |
Electrical Equipment | 11.2% | |
Road & Rail | 9.8% | |
All Others* | 16.9% |
* Includes short-term investments and net other assets (liabilities).
Industrials Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 99.4% | |||
Shares | Value | ||
Aerospace & Defense - 29.6% | |||
Aerospace & Defense - 29.6% | |||
Airbus Group NV | 48,800 | $6,230,741 | |
General Dynamics Corp. | 10,900 | 2,555,505 | |
HEICO Corp. (a) | 5,300 | 781,803 | |
HEICO Corp. Class A | 63,700 | 7,830,004 | |
Hexcel Corp. | 19,100 | 1,105,890 | |
Howmet Aerospace, Inc. | 532,200 | 19,116,624 | |
Raytheon Technologies Corp. | 138,100 | 14,182,870 | |
Spirit AeroSystems Holdings, Inc. Class A | 133,000 | 6,650,000 | |
The Boeing Co. (b) | 80,060 | 16,439,520 | |
TransDigm Group, Inc. (b) | 23,537 | 15,689,529 | |
Triumph Group, Inc. (b) | 644,422 | 16,136,327 | |
106,718,813 | |||
Building Products - 1.4% | |||
Building Products - 1.4% | |||
Builders FirstSource, Inc. (b) | 14,670 | 1,091,741 | |
Johnson Controls International PLC | 54,300 | 3,527,328 | |
Zurn Water Solutions Corp. | 14,900 | 484,548 | |
5,103,617 | |||
Commercial Services & Supplies - 1.9% | |||
Diversified Support Services - 1.9% | |||
Copart, Inc. (b) | 55,400 | 6,807,552 | |
Environmental & Facility Services - 0.0% | |||
Tetra Tech, Inc. | 500 | 79,385 | |
TOTAL COMMERCIAL SERVICES & SUPPLIES | 6,886,937 | ||
Construction & Engineering - 6.1% | |||
Construction & Engineering - 6.1% | |||
AECOM | 20,100 | 1,460,466 | |
Willscot Mobile Mini Holdings (b) | 575,800 | 20,458,174 | |
21,918,640 | |||
Electrical Equipment - 11.2% | |||
Electrical Components & Equipment - 11.2% | |||
Acuity Brands, Inc. | 48,916 | 8,920,811 | |
AMETEK, Inc. | 154,220 | 20,016,214 | |
nVent Electric PLC | 272,152 | 9,234,117 | |
Regal Rexnord Corp. | 12,977 | 2,080,862 | |
40,252,004 | |||
Industrial Conglomerates - 14.5% | |||
Industrial Conglomerates - 14.5% | |||
Honeywell International, Inc. | 61,998 | 11,764,121 | |
Roper Technologies, Inc. | 90,004 | 40,341,593 | |
52,105,714 | |||
Machinery - 18.0% | |||
Construction Machinery & Heavy Trucks - 0.8% | |||
PACCAR, Inc. | 33,400 | 3,066,454 | |
Industrial Machinery - 17.2% | |||
Crane Co. (a) | 219,100 | 22,146,628 | |
Flowserve Corp. | 11,700 | 355,329 | |
Fortive Corp. | 274,500 | 17,773,875 | |
IDEX Corp. | 6,200 | 1,189,780 | |
Ingersoll Rand, Inc. | 386,600 | 19,531,032 | |
ITT, Inc. | 9,545 | 838,719 | |
61,835,363 | |||
TOTAL MACHINERY | 64,901,817 | ||
Professional Services - 3.5% | |||
Human Resource & Employment Services - 1.0% | |||
TriNet Group, Inc. (b) | 42,930 | 3,748,218 | |
Research & Consulting Services - 2.5% | |||
Clarivate Analytics PLC (b) | 13,600 | 203,728 | |
CoStar Group, Inc. (b) | 42,100 | 2,568,521 | |
FTI Consulting, Inc. (a)(b) | 41,400 | 6,044,400 | |
8,816,649 | |||
TOTAL PROFESSIONAL SERVICES | 12,564,867 | ||
Road & Rail - 9.8% | |||
Railroads - 6.5% | |||
CSX Corp. | 212,400 | 7,202,484 | |
Norfolk Southern Corp. | 45,009 | 11,545,709 | |
Union Pacific Corp. | 19,021 | 4,678,215 | |
23,426,408 | |||
Trucking - 3.3% | |||
J.B. Hunt Transport Services, Inc. | 57,252 | 11,618,148 | |
Old Dominion Freight Lines, Inc. | 323 | 101,432 | |
11,719,580 | |||
TOTAL ROAD & RAIL | 35,145,988 | ||
Trading Companies & Distributors - 3.4% | |||
Trading Companies & Distributors - 3.4% | |||
Herc Holdings, Inc. (a) | 59,504 | 9,468,276 | |
United Rentals, Inc. (b) | 8,300 | 2,669,446 | |
12,137,722 | |||
TOTAL COMMON STOCKS | |||
(Cost $305,375,970) | 357,736,119 | ||
Money Market Funds - 1.0% | |||
Fidelity Cash Central Fund 0.07% (c) | 1,944,970 | 1,945,359 | |
Fidelity Securities Lending Cash Central Fund 0.07% (c)(d) | 1,593,616 | 1,593,775 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $3,539,134) | 3,539,134 | ||
TOTAL INVESTMENT IN SECURITIES - 100.4% | |||
(Cost $308,915,104) | 361,275,253 | ||
NET OTHER ASSETS (LIABILITIES) - (0.4)% | (1,510,268) | ||
NET ASSETS - 100% | $359,764,985 |
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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $915 | $219,400,307 | $217,455,863 | $1,325 | $-- | $-- | $1,945,359 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 4,412,646 | 122,581,244 | 125,400,115 | 3,402 | -- | -- | 1,593,775 | 0.0% |
Total | $4,413,561 | $341,981,551 | $342,855,978 | $4,727 | $-- | $-- | $3,539,134 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $357,736,119 | $351,505,378 | $6,230,741 | $-- |
Money Market Funds | 3,539,134 | 3,539,134 | -- | -- |
Total Investments in Securities: | $361,275,253 | $355,044,512 | $6,230,741 | $-- |
See accompanying notes which are an integral part of the financial statements.
Industrials Portfolio
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $1,580,485) — See accompanying schedule: Unaffiliated issuers (cost $305,375,970) | $357,736,119 | |
Fidelity Central Funds (cost $3,539,134) | 3,539,134 | |
Total Investment in Securities (cost $308,915,104) | $361,275,253 | |
Receivable for investments sold | 1,322,290 | |
Receivable for fund shares sold | 139,197 | |
Dividends receivable | 332,751 | |
Distributions receivable from Fidelity Central Funds | 287 | |
Prepaid expenses | 4,323 | |
Other receivables | 126,382 | |
Total assets | 363,200,483 | |
Liabilities | ||
Payable for investments purchased | $1,068,776 | |
Payable for fund shares redeemed | 400,025 | |
Accrued management fee | 158,855 | |
Other affiliated payables | 62,338 | |
Other payables and accrued expenses | 151,729 | |
Collateral on securities loaned | 1,593,775 | |
Total liabilities | 3,435,498 | |
Net Assets | $359,764,985 | |
Net Assets consist of: | ||
Paid in capital | $296,130,769 | |
Total accumulated earnings (loss) | 63,634,216 | |
Net Assets | $359,764,985 | |
Net Asset Value, offering price and redemption price per share ($359,764,985 ÷ 11,455,383 shares) | $31.41 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $2,872,457 | |
Income from Fidelity Central Funds (including $3,402 from security lending) | 4,727 | |
Total income | 2,877,184 | |
Expenses | ||
Management fee | $2,350,572 | |
Transfer agent fees | 707,800 | |
Accounting fees | 172,227 | |
Custodian fees and expenses | 17,402 | |
Independent trustees' fees and expenses | 1,739 | |
Registration fees | 33,525 | |
Audit | 39,025 | |
Legal | 3,497 | |
Interest | 1,300 | |
Miscellaneous | 3,283 | |
Total expenses before reductions | 3,330,370 | |
Expense reductions | (9,749) | |
Total expenses after reductions | 3,320,621 | |
Net investment income (loss) | (443,437) | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 100,683,250 | |
Foreign currency transactions | (6,866) | |
Total net realized gain (loss) | 100,676,384 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | (46,229,645) | |
Assets and liabilities in foreign currencies | (5) | |
Total change in net unrealized appreciation (depreciation) | (46,229,650) | |
Net gain (loss) | 54,446,734 | |
Net increase (decrease) in net assets resulting from operations | $54,003,297 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(443,437) | $(234,474) |
Net realized gain (loss) | 100,676,384 | 58,530,818 |
Change in net unrealized appreciation (depreciation) | (46,229,650) | 32,495,500 |
Net increase (decrease) in net assets resulting from operations | 54,003,297 | 90,791,844 |
Distributions to shareholders | (115,424,416) | (17,106,826) |
Share transactions | ||
Proceeds from sales of shares | 116,900,003 | 130,225,348 |
Reinvestment of distributions | 108,515,761 | 16,136,117 |
Cost of shares redeemed | (368,438,524) | (184,860,626) |
Net increase (decrease) in net assets resulting from share transactions | (143,022,760) | (38,499,161) |
Total increase (decrease) in net assets | (204,443,879) | 35,185,857 |
Net Assets | ||
Beginning of period | 564,208,864 | 529,023,007 |
End of period | $359,764,985 | $564,208,864 |
Other Information | ||
Shares | ||
Sold | 3,139,766 | 3,871,976 |
Issued in reinvestment of distributions | 3,143,897 | 620,923 |
Redeemed | (10,008,148) | (5,894,475) |
Net increase (decrease) | (3,724,485) | (1,401,576) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Industrials Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $37.17 | $31.90 | $33.84 | $36.96 | $33.72 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | (.04) | (.02) | .28D | .32 | .21 |
Net realized and unrealized gain (loss) | 3.70 | 6.38 | (.76) | (.70) | 4.95 |
Total from investment operations | 3.66 | 6.36 | (.48) | (.38) | 5.16 |
Distributions from net investment income | – | (.07)E | (.24) | (.25) | (.22) |
Distributions from net realized gain | (9.42) | (1.02)E | (1.23) | (2.49) | (1.71) |
Total distributions | (9.42) | (1.09) | (1.46)F | (2.74) | (1.92)F |
Net asset value, end of period | $31.41 | $37.17 | $31.90 | $33.84 | $36.96 |
Total ReturnG | 9.33% | 21.41% | (1.82)% | (.45)% | 15.73% |
Ratios to Average Net AssetsC,H,I | |||||
Expenses before reductions | .74% | .76% | .76% | .76% | .77% |
Expenses net of fee waivers, if any | .74% | .76% | .76% | .76% | .77% |
Expenses net of all reductions | .74% | .74% | .75% | .75% | .77% |
Net investment income (loss) | (.10)% | (.05)% | .81%D | .92% | .60% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $359,765 | $564,209 | $529,023 | $632,470 | $1,076,950 |
Portfolio turnover rateJ | 151% | 272% | 143%K | 88%K | 64%L |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.06 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .64%.
E The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
F Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
K Portfolio turnover rate excludes securities received or delivered in-kind.
L The portfolio turnover rate does not include the assets acquired in the merger.
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Transportation Portfolio | 20.35% | 11.75% | 14.27% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Transportation Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789799249_740.jpg)
Period Ending Values | ||
$37,971 | Transportation Portfolio | |
$39,037 | S&P 500® Index |
Transportation Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Matthew Moulis: For the fiscal year ending February 28, 2022, the fund gained 20.35%, outperforming the 12.81% advance of the MSCI U.S. IMI Transportation 25/50 Linked Index, as well as the broad-based S&P 500® index. Versus the industry index, market selection was the primary contributor, especially a sizable underweighting in the airlines category. The portfolio’s positioning among marine and air freight & logistics stocks also bolstered relative performance. The fund's largest individual relative contributor was an underweighting in Southwest Airlines, which returned about -25% the past 12 months, though it was no longer held at period end. A non-index stake in TFI International, one of our largest holdings this period, increased roughly 49% and further aided performance. Another notable relative contributor was an overweighting in Eagle Bulk Shipping (+68%), also one of our biggest holdings. Conversely, the largest detractors from performance versus the industry index were subpar investment choices and underweighted exposure to trucking and railroads stocks. Out-of-index exposure to the oil & gas storage & transportation group also hurt this period. Not owning Avis Budget Group, an index component that gained 230%, was the largest individual relative detractor. Further hampering performance was our smaller-than-index stake in Old Dominion Freight Lines, which rose about 47% and was not held at period end. Lastly, SkyWest Airlines returned -50% the past year and hindered relative performance as well. We reduced our stake in the company during the period. Notable changes in positioning include increased exposure to airlines and a lower allocation to trucking companies.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, 2022
% of fund's net assets | |
United Parcel Service, Inc. Class B | 15.9 |
Union Pacific Corp. | 14.3 |
Air Transport Services Group, Inc. | 9.3 |
CSX Corp. | 7.9 |
Eagle Bulk Shipping, Inc. | 4.7 |
Alaska Air Group, Inc. | 4.2 |
Uber Technologies, Inc. | 3.8 |
FedEx Corp. | 3.6 |
Norfolk Southern Corp. | 3.1 |
J.B. Hunt Transport Services, Inc. | 2.9 |
69.7 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Road & Rail | 39.3% | |
Air Freight & Logistics | 36.2% | |
Airlines | 11.3% | |
Marine | 9.4% | |
Oil, Gas & Consumable Fuels | 1.2% | |
All Others* | 2.6% |
* Includes short-term investments and net other assets (liabilities).
Transportation Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 99.6% | |||
Shares | Value | ||
Air Freight & Logistics - 36.2% | |||
Air Freight & Logistics - 36.2% | |||
Air Transport Services Group, Inc. (a) | 1,996,662 | $62,914,820 | |
Atlas Air Worldwide Holdings, Inc. (a) | 84,800 | 6,644,928 | |
C.H. Robinson Worldwide, Inc. (b) | 192,296 | 18,591,177 | |
Expeditors International of Washington, Inc. | 133,538 | 13,802,488 | |
FedEx Corp. | 111,341 | 24,747,764 | |
Forward Air Corp. | 36,900 | 3,807,342 | |
GXO Logistics, Inc. (a) | 29,522 | 2,477,781 | |
Hub Group, Inc. Class A (a) | 53,049 | 4,477,336 | |
United Parcel Service, Inc. Class B | 513,591 | 108,069,816 | |
245,533,452 | |||
Airlines - 11.3% | |||
Airlines - 11.3% | |||
Alaska Air Group, Inc. (a) | 512,500 | 28,771,750 | |
Allegiant Travel Co. (a) | 16,500 | 2,872,485 | |
Canada Jetlines Ltd. | 1,250 | 288 | |
Copa Holdings SA Class A (a)(b) | 165,200 | 14,015,568 | |
Delta Air Lines, Inc. (a) | 365,661 | 14,597,187 | |
Frontier Group Holdings, Inc. (a)(b) | 375,800 | 4,840,304 | |
SkyWest, Inc. (a) | 52,000 | 1,461,720 | |
Sun Country Airlines Holdings, Inc. (a)(b) | 264,100 | 7,143,905 | |
United Airlines Holdings, Inc. (a) | 71,779 | 3,186,988 | |
76,890,195 | |||
Electrical Equipment - 0.9% | |||
Electrical Components & Equipment - 0.9% | |||
Sensata Technologies, Inc. PLC (a)(b) | 109,600 | 6,346,936 | |
Internet & Direct Marketing Retail - 1.1% | |||
Internet & Direct Marketing Retail - 1.1% | |||
Points.com, Inc. (a) | 427,263 | 7,716,370 | |
Marine - 9.4% | |||
Marine - 9.4% | |||
Eagle Bulk Shipping, Inc. (b) | 602,430 | 31,766,134 | |
Genco Shipping & Trading Ltd. | 438,036 | 8,445,334 | |
Kirby Corp. (a) | 238,700 | 15,551,305 | |
Matson, Inc. (b) | 33,495 | 3,710,241 | |
Star Bulk Carriers Corp. (b) | 97,500 | 2,932,800 | |
ZIM Integrated Shipping Services Ltd. (b) | 14,800 | 1,032,892 | |
63,438,706 | |||
Oil, Gas & Consumable Fuels - 1.2% | |||
Coal & Consumable Fuels - 0.4% | |||
Peabody Energy Corp. (a) | 168,000 | 2,913,120 | |
Oil & Gas Exploration & Production - 0.4% | |||
Canadian Natural Resources Ltd. | 51,800 | 2,891,994 | |
Oil & Gas Storage & Transport - 0.4% | |||
International Seaways, Inc. (b) | 139,500 | 2,551,455 | |
TOTAL OIL, GAS & CONSUMABLE FUELS | 8,356,569 | ||
Professional Services - 0.2% | |||
Human Resource & Employment Services - 0.2% | |||
Cool Co. Ltd. (a) | 162,100 | 1,477,468 | |
Road & Rail - 39.3% | |||
Railroads - 25.9% | |||
Canadian National Railway Co. | 31,100 | 3,858,118 | |
CSX Corp. | 1,576,701 | 53,465,931 | |
Norfolk Southern Corp. | 82,036 | 21,043,875 | |
Union Pacific Corp. | 395,237 | 97,208,540 | |
175,576,464 | |||
Trucking - 13.4% | |||
AMERCO | 10,969 | 6,335,804 | |
ArcBest Corp. (b) | 28,300 | 2,622,844 | |
J.B. Hunt Transport Services, Inc. | 95,911 | 19,463,219 | |
Knight-Swift Transportation Holdings, Inc. Class A | 111,200 | 6,058,176 | |
Lyft, Inc. (a) | 60,900 | 2,371,446 | |
Ryder System, Inc. (b) | 113,907 | 8,980,428 | |
Saia, Inc. (a) | 6,324 | 1,816,443 | |
TFI International, Inc. | 53,200 | 5,548,228 | |
TFI International, Inc. (Canada) | 46,700 | 4,867,853 | |
Uber Technologies, Inc. (a) | 709,504 | 25,563,429 | |
Universal Logistics Holdings, Inc. | 45,600 | 872,328 | |
Werner Enterprises, Inc. | 23,783 | 1,033,609 | |
XPO Logistics, Inc. (a)(b) | 77,922 | 5,663,371 | |
91,197,178 | |||
TOTAL ROAD & RAIL | 266,773,642 | ||
TOTAL COMMON STOCKS | |||
(Cost $458,312,637) | 676,533,338 | ||
Money Market Funds - 12.0% | |||
Fidelity Cash Central Fund 0.07% (c) | 10,407,090 | 10,409,172 | |
Fidelity Securities Lending Cash Central Fund 0.07% (c)(d) | 71,028,250 | 71,035,353 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $81,444,525) | 81,444,525 | ||
TOTAL INVESTMENT IN SECURITIES - 111.6% | |||
(Cost $539,757,162) | 757,977,863 | ||
NET OTHER ASSETS (LIABILITIES) - (11.6)% | (78,675,154) | ||
NET ASSETS - 100% | $679,302,709 |
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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $7,057,985 | $172,209,929 | $168,858,742 | $4,366 | $-- | $-- | $10,409,172 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 1,190,125 | 269,080,192 | 199,234,964 | 42,665 | -- | -- | 71,035,353 | 0.2% |
Total | $8,248,110 | $441,290,121 | $368,093,706 | $47,031 | $-- | $-- | $81,444,525 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $676,533,338 | $675,055,582 | $1,477,756 | $-- |
Money Market Funds | 81,444,525 | 81,444,525 | -- | -- |
Total Investments in Securities: | $757,977,863 | $756,500,107 | $1,477,756 | $-- |
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 | 86.3% |
Marshall Islands | 6.7% |
Canada | 3.6% |
Panama | 2.1% |
Others (Individually Less Than 1%) | 1.3% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Transportation Portfolio
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $67,439,166) — See accompanying schedule: Unaffiliated issuers (cost $458,312,637) | $676,533,338 | |
Fidelity Central Funds (cost $81,444,525) | 81,444,525 | |
Total Investment in Securities (cost $539,757,162) | $757,977,863 | |
Receivable for investments sold | 16,156,142 | |
Receivable for fund shares sold | 342,716 | |
Dividends receivable | 1,380,416 | |
Distributions receivable from Fidelity Central Funds | 4,263 | |
Prepaid expenses | 2,192 | |
Other receivables | 10,485 | |
Total assets | 775,874,077 | |
Liabilities | ||
Payable for investments purchased | $24,080,179 | |
Payable for fund shares redeemed | 997,512 | |
Accrued management fee | 296,721 | |
Other affiliated payables | 122,429 | |
Other payables and accrued expenses | 39,174 | |
Collateral on securities loaned | 71,035,353 | |
Total liabilities | 96,571,368 | |
Net Assets | $679,302,709 | |
Net Assets consist of: | ||
Paid in capital | $445,457,920 | |
Total accumulated earnings (loss) | 233,844,789 | |
Net Assets | $679,302,709 | |
Net Asset Value, offering price and redemption price per share ($679,302,709 ÷ 6,419,213 shares) | $105.82 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $6,562,909 | |
Income from Fidelity Central Funds (including $42,665 from security lending) | 47,031 | |
Total income | 6,609,940 | |
Expenses | ||
Management fee | $2,547,596 | |
Transfer agent fees | 871,440 | |
Accounting fees | 182,644 | |
Custodian fees and expenses | 13,612 | |
Independent trustees' fees and expenses | 1,773 | |
Registration fees | 36,146 | |
Audit | 52,433 | |
Legal | 10,133 | |
Interest | 244 | |
Miscellaneous | 2,343 | |
Total expenses before reductions | 3,718,364 | |
Expense reductions | (11,756) | |
Total expenses after reductions | 3,706,608 | |
Net investment income (loss) | 2,903,332 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 53,867,339 | |
Foreign currency transactions | 6,294 | |
Total net realized gain (loss) | 53,873,633 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | 9,800,691 | |
Assets and liabilities in foreign currencies | (207) | |
Total change in net unrealized appreciation (depreciation) | 9,800,484 | |
Net gain (loss) | 63,674,117 | |
Net increase (decrease) in net assets resulting from operations | $66,577,449 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $2,903,332 | $3,883,427 |
Net realized gain (loss) | 53,873,633 | 10,993,185 |
Change in net unrealized appreciation (depreciation) | 9,800,484 | 72,710,640 |
Net increase (decrease) in net assets resulting from operations | 66,577,449 | 87,587,252 |
Distributions to shareholders | (47,428,580) | (27,097,439) |
Share transactions | ||
Proceeds from sales of shares | 148,678,513 | 67,825,627 |
Net asset value of shares issued in exchange for the net assets of the Target Fund(s) (see Merger information note) | 322,796,887 | – |
Reinvestment of distributions | 44,843,850 | 25,610,516 |
Cost of shares redeemed | (191,945,005) | (128,587,302) |
Net increase (decrease) in net assets resulting from share transactions | 324,374,245 | (35,151,159) |
Total increase (decrease) in net assets | 343,523,114 | 25,338,654 |
Net Assets | ||
Beginning of period | 335,779,595 | 310,440,941 |
End of period | $679,302,709 | $335,779,595 |
Other Information | ||
Shares | ||
Sold | 1,386,810 | 836,595 |
Issued in exchange for the shares of the Target Fund(s) (see Merger Information note) | 3,028,967 | – |
Issued in reinvestment of distributions | 421,380 | 390,206 |
Redeemed | (1,810,854) | (1,614,325) |
Net increase (decrease) | 3,026,303 | (387,524) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Transportation Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $98.97 | $82.12 | $95.41 | $99.07 | $92.98 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .64 | 1.06D | .93 | .85 | .78 |
Net realized and unrealized gain (loss) | 19.26 | 23.43 | (10.43) | 5.05 | 10.83 |
Total from investment operations | 19.90 | 24.49 | (9.50) | 5.90 | 11.61 |
Distributions from net investment income | (1.03) | (.76) | (1.10) | (.78) | (.67) |
Distributions from net realized gain | (12.03) | (6.88) | (2.70) | (8.78) | (4.85) |
Total distributions | (13.05)E | (7.64) | (3.79)E | (9.56) | (5.52) |
Redemption fees added to paid in capitalB | – | – | – | – | –F |
Net asset value, end of period | $105.82 | $98.97 | $82.12 | $95.41 | $99.07 |
Total ReturnG | 20.35% | 34.62% | (10.49)% | 6.85% | 12.48% |
Ratios to Average Net AssetsC,H,I | |||||
Expenses before reductions | .77% | .80% | .79% | .79% | .80% |
Expenses net of fee waivers, if any | .77% | .80% | .79% | .79% | .80% |
Expenses net of all reductions | .77% | .80% | .79% | .78% | .80% |
Net investment income (loss) | .60% | 1.29%D | 1.00% | .87% | .80% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $679,303 | $335,780 | $310,441 | $451,192 | $512,155 |
Portfolio turnover rateJ | 66%K | 52% | 78% | 58% | 47% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.34 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .88%.
E Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
K The portfolio turnover rate does not include the assets acquired in the merger.
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2022
1. Organization.
Defense and Aerospace 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.
Funds may 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
Based on its investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the investing fund. These strategies are consistent with the investment objectives of the investing fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the investing fund.
Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio(a) |
Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | Less than .005% |
(a) Expenses expressed as a percentage of average net assets and are as of each underlying Central Fund's most recent annual or semi-annual shareholder report.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which contain the significant accounting policies (including investment valuation policies) of those funds, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission website or upon request.
3. Significant Accounting Policies.
Each Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies. 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. Each Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. The following summarizes the significant accounting policies of each 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 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 – Unadjusted 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. 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, 2022, is included at the end of each Fund's Schedule of Investments.
Foreign Currency. Certain 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 for certain Funds include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable.
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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. 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 certain Funds, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in affiliated mutual funds, are marked-to-market and remain in a fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees presented below are included in the accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, as applicable.
Defense and Aerospace Portfolio | $126,439 |
Industrials Portfolio | 117,570 |
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, 2022, 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), certain deemed dividend, partnerships, deferred Trustees compensation, net operating losses, capital loss carryforwards, losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows for each Fund:
Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) | |
Defense and Aerospace Portfolio | $1,055,516,332 | $ 504,589,776 | $(15,084,672) | $ 489,505,104 |
Industrials Portfolio | 310,244,289 | 59,317,823 | (8,286,859) | 51,030,964 |
Transportation Portfolio | 541,540,018 | 230,422,725 | (13,984,880) | 216,437,845 |
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 | |
Defense and Aerospace Portfolio | $– | $124,904,597 | $489,505,104 |
Industrials Portfolio | 1,298,441 | 11,414,835 | 51,030,923 |
Transportation Portfolio | 37,132 | 18,095,446 | 216,437,893 |
The Funds intends to elect to defer to its next fiscal year capital losses recognized during the period November 1, 2021 to February 28, 2022 (FYE).
Transportation Portfolio | $(725,683) |
The tax character of distributions paid was as follows:
February 28, 2022 | |||
Ordinary Income | Long-term Capital Gains | Total | |
Defense and Aerospace Portfolio | $– | $114,456,735 | $114,456,735 |
Industrials Portfolio | 26,589,200 | 88,835,216 | 115,424,416 |
Transportation Portfolio | 8,956,782 | 38,471,798 | 47,428,580 |
February 28, 2021 | |||
Ordinary Income | Long-term Capital Gains | Total | |
Defense and Aerospace Portfolio | $7,565,576 | $44,939,506 | $52,505,082 |
Industrials Portfolio | 1,388,402 | 15,718,424 | 17,106,826 |
Transportation Portfolio | 2,696,447 | 24,400,992 | 27,097,439 |
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, securities acquired in the merger and in-kind transactions, as applicable, are noted in the table below.
Purchases ($) | Sales ($) | |
Defense and Aerospace Portfolio | 838,576,968 | 1,150,896,879 |
Industrials Portfolio | 670,645,909 | 933,102,684 |
Transportation Portfolio | 299,767,599 | 329,200,652 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company 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 monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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 | |
Defense and Aerospace Portfolio | .30% | .22% | .52% |
Industrials Portfolio | .30% | .22% | .52% |
Transportation Portfolio | .30% | .22% | .53% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (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:
Defense and Aerospace Portfolio | .18% |
Industrials Portfolio | .16% |
Transportation Portfolio | .18% |
Accounting 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. For the period, the fees were equivalent to the following annual rates:
% of Average Net Assets | |
Defense and Aerospace Portfolio | .03 |
Industrials Portfolio | .04 |
Transportation Portfolio | .04 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 | |
Defense and Aerospace Portfolio | $22,647 |
Industrials Portfolio | 12,692 |
Transportation Portfolio | 7,761 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), each Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing each Fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. 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 | |
Defense and Aerospace Portfolio | Borrower | $8,203,000 | .32% | $291 |
Industrials Portfolio | Borrower | $10,009,467 | .31% | $1,300 |
Transportation Portfolio | Borrower | $5,437,800 | .32% | $244 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
Defense and Aerospace Portfolio | 25,963,816 | 86,964,201 | 31,308,751 |
Industrials Portfolio | 27,234,717 | 49,184,719 | 5,525,379 |
Transportation Portfolio | 17,969,182 | 8,078,237 | 728,903 |
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 listed below. During the period, there were no borrowings on this line of credit.
Amount | |
Defense and Aerospace Portfolio | $2,873 |
Industrials Portfolio | 838 |
Transportation Portfolio | 814 |
7. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the 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. Affiliated security lending activity, if any, was as follows:
Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
Defense and Aerospace Portfolio | $24,286 | $36,268 | $– |
Industrials Portfolio | $333 | $1 | $– |
Transportation Portfolio | $4,433 | $20 | $– |
8. Expense Reductions.
During the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses as follows:
Amount | |
Defense and Aerospace Portfolio | $36,500 |
Industrials Portfolio | 9,749 |
Transportation Portfolio | 11,756 |
9. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a fund. The risk of material loss from such claims is considered remote.
10. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Funds' performance.
11. Merger Information.
On November 12, 2021, Transportation Portfolio acquired all of the assets and assumed all of the liabilities of Air Transportation Portfolio ("Target Fund") pursuant to an Agreement and Plan of Reorganization approved by the Board of Trustees ("The Board"). The securities held by the Target Fund were the primary assets acquired by the Fund. The acquisition was accomplished by an exchange of shares of the Fund for shares then outstanding of the Target Fund at its respective net asset value on the acquisition date. The reorganization provides shareholders of the Target Fund access to a larger portfolio with a similar investment objective and lower projected expenses. For financial reporting purposes, the assets and liabilities of the Target Fund and shares issued by the Fund were recorded at fair value; however, the cost basis of the investments received from the Target Fund were carried forward and will be utilized for purposes of the Fund's ongoing reporting of realized and unrealized gains and losses to more closely align subsequent reporting of realized gains with amounts distributable to shareholders for tax purposes. The reorganization qualified as a tax-free reorganization for federal income tax purposes with no gain or loss recognized to the funds or their shareholders.
Target Fund | Investments $ | Unrealized appreciation (depreciation) $ | Net Assets $ | Shares Exchanged | Shares Exchanged Ratio |
Air Transportation Portfolio | 320,705,550 | 47,927,461 | 322,796,887 | 3,028,967 | .5404138125 |
Surviving Fund | Net Assets $ | Total net assets after the acquisition $ |
Transportation Portfolio | 411,872,847 | 734,669,734 |
Pro forma results of operations of the combined entity for the entire period ended February 28, 2022, as though the acquisition had occurred as of the beginning of the year (rather than on the actual acquisition date), are as follows:
Net investment income (loss) | $2,600,527 |
Total net realized gain (loss) | 134,920,339 |
Total change in net unrealized appreciation (depreciation) | (53,851,879) |
Net increase (decrease) in net assets resulting from operations | $83,668,987 |
Because the combined investment portfolios have been managed as a single portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of the acquired fund that have been included in the Transportation Portfolio's accompanying Statement of Operations since November 12, 2021.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and Shareholders of Defense and Aerospace Portfolio, Industrials Portfolio and Transportation Portfolio
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Defense and Aerospace Portfolio, Industrials Portfolio, and Transportation Portfolio (three of the funds constituting Fidelity Select Portfolios, hereafter collectively referred to as the “Funds”) as of February 28, 2022, the related statements of operations for the year ended February 28, 2022, the statements of changes in net assets for each of the two years in the period ended February 28, 2022, including the related notes, and the financial highlights for each of the five years in the period ended February 28, 2022 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of February 28, 2022, 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 ended February 28, 2022 and each of the financial highlights for each of the five years in the period ended February 28, 2022 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 28, 2022 by correspondence with the custodian 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 opinions.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
April 13, 2022
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
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 317 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. Robert A. Lawrence is an interested person and currently serves as Acting 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. David M. Thomas serves as Lead Independent Trustee 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 high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the funds' Board. 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 FMR 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 FMR, 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, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. 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+
Bettina Doulton (1964)
Year of Election or Appointment: 2020
Trustee
Ms. Doulton also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Doulton served in a variety of positions at Fidelity Investments, including as a managing director of research (2006-2007), portfolio manager to certain Fidelity® funds (1993-2005), equity analyst and portfolio assistant (1990-1993), and research assistant (1987-1990). Ms. Doulton currently owns and operates Phi Builders + Architects and Cellardoor Winery. Previously, Ms. Doulton served as a member of the Board of Brown Capital Management, LLC (2014-2018).
Robert A. Lawrence (1952)
Year of Election or Appointment: 2020
Trustee
Acting Chairman of the Board of Trustees
Mr. Lawrence also serves as Trustee of other funds. Previously, Mr. Lawrence served as a Member of the Advisory Board of certain funds. Prior to his retirement in 2008, Mr. Lawrence served as Vice President of certain Fidelity® funds (2006-2008), Senior Vice President, Head of High Income Division of Fidelity Management & Research Company (investment adviser firm, 2006-2008), and President of Fidelity Strategic Investments (investment adviser firm, 2002-2005).
* 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 FMR.
+ 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+
Thomas P. Bostick (1956)
Year of Election or Appointment: 2021
Trustee
Lieutenant General Bostick also serves as Trustee of other Fidelity® funds. Prior to his retirement, General Bostick (United States Army, Retired) held a variety of positions within the U.S. Army, including Commanding General and Chief of Engineers, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff and Director of Human Resources, U.S. Army (2009-2012). General Bostick currently serves as a member of the Board and Finance and Governance Committees of CSX Corporation (transportation, 2020-present) and a member of the Board and Corporate Governance and Nominating Committee of Perma-Fix Environmental Services, Inc. (nuclear waste management, 2020-present). General Bostick serves as Chief Executive Officer of Bostick Global Strategies, LLC (consulting, 2016-present) and as a member of the Board of HireVue, Inc. (video interview and assessment, 2020-present). Previously, General Bostick served as a Member of the Advisory Board of certain Fidelity® funds (2021), President, Intrexon Bioengineering (2018-2020) and Chief Operating Officer (2017-2020) and Senior Vice President of the Environment Sector (2016-2017) of Intrexon Corporation (biopharmaceutical company).
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 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 currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York and a member of the Board of The Leadership Academy (previously NYC Leadership Academy) (2012-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Vicki L. Fuller (1957)
Year of Election or Appointment: 2020
Trustee
Ms. Fuller also serves as Trustee of other Fidelity® funds. Previously, Ms. Fuller served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of two Blackstone business development companies (2020-present), as a member of the Board of Treliant, LLC (consulting, 2019-present), as a member of the Advisory Board of Ariel Alternatives, LLC (private equity, 2021-present) and as a member of the Board and Chair of the Audit Committee of Gusto, Inc. (software, 2021-present). In addition, Ms. Fuller currently serves as a member of the Board of Roosevelt University (2019-present) and as a member of the Executive Board of New York University’s Stern School of Business. Ms. Fuller previously served as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-2021).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Trustee
Ms. Kampling also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Finance Committee and Governance, Compensation and Nominating Committee of Xcel Energy Inc. (utilities company, 2020-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee and Chair of the Executive Development and Compensation Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a Member of the Advisory Board of certain Fidelity® funds (2020), a member of the Board, Compensation Committee and Executive Committee and Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-2021), a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Thomas A. Kennedy (1955)
Year of Election or Appointment: 2021
Trustee
Mr. Kennedy also serves as Trustee of other Fidelity® funds. Previously, Mr. Kennedy served as a Member of the Advisory Board of certain Fidelity® funds (2020) and held a variety of positions at Raytheon Company (aerospace and defense, 1983-2020), including Chairman and Chief Executive Officer (2014-2020) and Executive Vice President and Chief Operating Officer (2013-2014). Mr. Kennedy currently serves as Executive Chairman of the Board of Directors of Raytheon Technologies Corporation (aerospace and defense, 2020-present). He is also a member of the Rutgers School of Engineering Industry Advisory Board (2011-present) and a member of the UCLA Engineering Dean’s Executive Board (2016-present).
Oscar Munoz (1959)
Year of Election or Appointment: 2021
Trustee
Mr. Munoz also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Munoz served as Executive Chairman (2020-2021), Chief Executive Officer (2015-2020), President (2015-2016) and a member of the Board (2010-2021) of United Airlines Holdings, Inc. Mr. Munoz currently serves as a member of the Board of CBRE Group, Inc. (commercial real estate, 2020-present), a member of the Board of Univision Communications, Inc. (Hispanic media, 2020-present) and a member of the Advisory Board of Salesforce.com, Inc. (cloud-based software, 2020-present). Previously, Mr. Munoz served as a Member of the Advisory Board of certain Fidelity® funds (2021).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Lead Independent Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as a member of the Board of Fortune Brands Home and Security (home and security products, 2004-present) and as Director (2013-present) and Non-Executive Chairman of the Board (2022-present) of Interpublic Group of Companies, Inc. (marketing communication).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Trustee
Ms. Tomasky also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Executive Committee, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present) and as a member of the Board of its subsidiary company, Public Service Electric and Gas Co. (2021-present). In addition, Ms. Tomasky currently serves as a member (2009-present) and President (2020-present) of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board and Kenyon in the World Committee of Kenyon College (2016-present). Previously, Ms. Tomasky served as a Member of the Advisory Board of certain Fidelity® funds (2020), as a member of the Board of the Columbus Regional Airport Authority (2007-2020), as a member of the Board (2011-2018) and Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee of other Fidelity® funds. Previously, Mr. Wiley served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley also previously served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018), a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018) and a member of the Board of High Point Resources (exploration and production, 2005-2020).
+ 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 (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as an officer of other funds. Mr. Brown serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
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 Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as an officer of other funds. Mr. Davis serves as Assistant Treasurer of FIMM, LLC (2021-present), FMR Capital, Inc. (2017-present), FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); 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).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2017-present). Previously, Ms. Del Prato served as President and Treasurer of The North Carolina Capital Management Trust: Cash Portfolio and Term Portfolio (2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present); Secretary of FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); and Assistant Secretary of FIMM, LLC (2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); 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).
Jason P. Pogorelec (1975)
Year of Election or Appointment: 2020
Chief Compliance Officer
Mr. Pogorelec also serves as Chief Compliance Officer of other funds. Mr. Pogorelec is a senior Vice President of Asset Management Compliance for Fidelity Investments and is an employee of Fidelity Investments (2006-present). Previously, Mr. Pogorelec served as Vice President, Associate General Counsel for Fidelity Investments (2010-2020) and Assistant Secretary of certain Fidelity funds (2015-2020).
Brett Segaloff (1972)
Year of Election or Appointment: 2021
Anti-Money Laundering (AML) Officer
Mr. Segaloff also serves as an AML Officer of other funds and other related entities. He is Director, Anti-Money Laundering (2007-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments (1996-present).
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), 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 Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as an officer of other funds. Mr. Wegmann serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2011-present). Previously, Mr. Wegmann served as Assistant Treasurer of certain Fidelity® funds (2019-2021).
Shareholder Expense Example
As a shareholder, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or redemption proceeds, as applicable and (2) ongoing costs, which generally include 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 a 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, 2021 to February 28, 2022).
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 for a class/Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If any fund is a shareholder of any underlying mutual funds or exchange-traded funds (ETFs) (the Underlying Funds), such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses incurred presented in the table. These fees and expenses are not included in the 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 actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the 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. If any fund is a shareholder of any Underlying Funds, such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses as presented in the table. These fees and expenses are not included in the 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, 2021 | Ending Account Value February 28, 2022 | Expenses Paid During Period-B September 1, 2021 to February 28, 2022 | |
Defense and Aerospace Portfolio | .73% | |||
Actual | $1,000.00 | $1,044.90 | $3.70 | |
Hypothetical-C | $1,000.00 | $1,021.17 | $3.66 | |
Industrials Portfolio | .74% | |||
Actual | $1,000.00 | $964.40 | $3.60 | |
Hypothetical-C | $1,000.00 | $1,021.12 | $3.71 | |
Transportation Portfolio | .76% | |||
Actual | $1,000.00 | $1,054.80 | $3.87 | |
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 the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/ 365 (to reflect the one-half year period). The fees and expenses of any Underlying Funds are not included in each annualized expense ratio.
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 | |
Defense and Aerospace Portfolio | 04/11/22 | 04/08/22 | $0.000 | $1.314 |
Industrials Portfolio | 04/11/22 | 04/08/22 | $0.000 | $1.127 |
Transportation Portfolio | 04/11/22 | 04/08/22 | $0.006 | $2.822 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2022, or, if subsequently determined to be different, the net capital gain of such year.
Defense and Aerospace Portfolio | $251,161,730 |
Industrials Portfolio | $55,815,236 |
Transportation Portfolio | $50,930,505 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended November 12, 2021, or, if subsequently determined to be different, the net capital gain of such year.
Air Transportation Portfolio | $56,112,310 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
April 2021 | November 2021 | December 2021 | |
Industrials Portfolio | 28% | – | 12% |
Transportation Portfolio | 100% | 52% | 52% |
Air Transportation Portfolio | – | 100% | N/A |
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 2021 | November 2021 | December 2021 | |
Industrials Portfolio | 30% | –% | 14% |
Transportation Portfolio | 100% | 68% | 68% |
Air Transportation Portfolio | – | 100% | N/A |
The funds hereby designate the percentages noted below of the short-term capital gain dividends distributed during the fiscal year as qualifying to be taxed as short-term capital gain dividends for nonresident alien shareholders:
April 2021 | November 2021 | December 2021 | |
Industrials Portfolio | 100% | – | 100% |
Transportation Portfolio | – | 100% | – |
Air Transportation Portfolio | – | 100% | N/A |
The funds will notify shareholders in January 2023 of amounts for use in preparing 2022 income tax returns.
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Funds have adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage each Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. Each Fund’s Board of Trustees (the Board) has designated each Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2020 through November 30, 2021. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
SELCI-ANN-0422
1.813657.117
Fidelity® Select Portfolios®
Information Technology Sector
IT Services Portfolio
Semiconductors Portfolio
Software and IT Services Portfolio
Tech Hardware Portfolio (formerly Computers Portfolio)
Technology Portfolio
February 28, 2022
![Fidelity Investments](https://capedge.com/proxy/N-CSR/0001379491-22-001658/fid_sun.jpg)
![Fidelity Investments](https://capedge.com/proxy/N-CSR/0001379491-22-001658/fipro_logo.jpg)
Contents
IT Services Portfolio | |
Semiconductors Portfolio | |
Software and IT Services Portfolio | |
Tech Hardware Portfolio | |
Technology Portfolio | |
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. © 2022 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-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT 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.
Note to Shareholders:
Early in 2020, the outbreak and spread of COVID-19 emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread. The pandemic prompted a number of measures to limit the spread of COVID-19, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. To help stem the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
In general, the overall impact of the pandemic lessened in 2021, amid a resilient economy and widespread distribution of three COVID-19 vaccines granted emergency use authorization from the U.S. Food and Drug Administration (FDA) early in the year. Still, the situation remains dynamic, and the extent and duration of its influence on financial markets and the economy is highly uncertain, due in part to a recent spike in cases based on highly contagious variants of the coronavirus.
Extreme events such as the COVID-19 crisis are exogenous shocks that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets. Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we continue to take extra steps to be responsive to customer needs. We encourage you to visit us online, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
IT Services Portfolio | (13.31)% | 16.26% | 16.78% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in IT Services Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789798466_740.jpg)
Period Ending Values | ||
$47,181 | IT Services Portfolio | |
$39,037 | S&P 500® Index |
IT Services Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Becky Baker: For the fiscal year, the fund returned -13.31%, underperforming the -11.08% result of the MSCI U.S. IMI IT Services 25/50 Index, as well as the broad-based S&P 500® index. The primary detractor from performance versus the industry index was security selection in data processing & outsourced services. An underweighting in IT consulting & other services and stock picks in internet services & infrastructure also hampered the fund's relative result. The fund's biggest individual relative detractor was our lighter-than-index stake in IBM, which gained 13% the past 12 months. IBM was not held at period end. Another notable relative detractor was an underweighting in Automatic Data Processing (+20%). This period we decreased our stake. Avoiding Paychex, an index component that gained 34%, also hurt relative performance. In contrast, the top contributor to performance versus the industry index was largely out-of-index exposure to application software. Our top individual relative contributor was an out-of-index stake in Intuit (+21%), which was among our largest holdings. Also bolstering performance was our lighter-than-index stake in PayPal Holdings, which returned -57%. The company was among the fund's biggest holdings. Another notable relative contributor was an outsized stake in DXC Technology (+35%), which was one of the fund's top holdings. Notable changes in positioning include increased exposure to the IT consulting & other services subindustry and a lower allocation to application software.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.
IT Services Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
MasterCard, Inc. Class A | 18.0 |
Visa, Inc. Class A | 16.9 |
Accenture PLC Class A | 9.7 |
Cognizant Technology Solutions Corp. Class A | 5.8 |
Block, Inc. Class A | 3.5 |
PayPal Holdings, Inc. | 3.3 |
WNS Holdings Ltd. sponsored ADR | 3.2 |
Intuit, Inc. | 3.0 |
DXC Technology Co. | 2.7 |
Snowflake Computing, Inc. | 2.5 |
68.6 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
IT Services | 89.2% | |
Software | 4.3% | |
Media | 2.1% | |
Internet & Direct Marketing Retail | 1.4% | |
Diversified Consumer Services | 1.3% | |
All Others* | 1.7% |
* Includes short-term investments and net other assets (liabilities).
IT Services Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 100.2% | |||
Shares | Value | ||
Diversified Consumer Services - 1.3% | |||
Specialized Consumer Services - 1.3% | |||
H&R Block, Inc. (a) | 1,519,900 | $37,708,719 | |
Industrial Conglomerates - 0.1% | |||
Industrial Conglomerates - 0.1% | |||
Hitachi Ltd. | 72,400 | 3,558,126 | |
Interactive Media & Services - 0.6% | |||
Interactive Media & Services - 0.6% | |||
Meta Platforms, Inc. Class A (b) | 34,800 | 7,343,844 | |
NerdWallet, Inc. (a) | 891,200 | 10,204,240 | |
17,548,084 | |||
Internet & Direct Marketing Retail - 1.4% | |||
Internet & Direct Marketing Retail - 1.4% | |||
Global-e Online Ltd. (a)(b) | 1,005,225 | 39,344,507 | |
IT Services - 89.2% | |||
Data Processing & Outsourced Services - 56.2% | |||
Adyen BV (b)(c) | 8,900 | 18,550,036 | |
Affirm Holdings, Inc. (a)(b) | 282,100 | 11,803,064 | |
Automatic Data Processing, Inc. | 147,575 | 30,170,233 | |
Block, Inc. Class A (b) | 778,000 | 99,195,000 | |
ExlService Holdings, Inc. (b) | 336,700 | 40,669,993 | |
Fidelity National Information Services, Inc. | 607,597 | 57,861,462 | |
Fiserv, Inc. (b) | 639,417 | 62,451,858 | |
Flywire Corp. (b) | 63,500 | 1,718,310 | |
Genpact Ltd. | 607,480 | 25,416,963 | |
Global Payments, Inc. | 298,103 | 39,760,978 | |
MasterCard, Inc. Class A | 1,432,700 | 516,946,812 | |
Nuvei Corp. (a)(c) | 51,900 | 2,817,651 | |
Paymentus Holdings, Inc. (a)(b) | 1,181,600 | 27,224,064 | |
PayPal Holdings, Inc. (b) | 845,940 | 94,686,064 | |
TaskUs, Inc. | 336,437 | 9,662,471 | |
TDCX, Inc. ADR | 10,000 | 151,000 | |
The Western Union Co. | 4,800 | 87,264 | |
Ttec Holdings, Inc. | 2,000 | 159,000 | |
Visa, Inc. Class A (a) | 2,241,048 | 484,335,294 | |
WEX, Inc. (b) | 700 | 117,957 | |
WNS Holdings Ltd. sponsored ADR (b) | 1,102,692 | 91,115,440 | |
1,614,900,914 | |||
Internet Services & Infrastructure - 9.6% | |||
Cloudflare, Inc. (b) | 83,300 | 9,697,786 | |
GoDaddy, Inc. (b) | 182,827 | 15,249,600 | |
MongoDB, Inc. Class A (b) | 147,100 | 56,190,729 | |
Okta, Inc. (b) | 348,000 | 63,628,320 | |
Snowflake Computing, Inc. (b) | 265,900 | 70,638,994 | |
Twilio, Inc. Class A (b) | 318,600 | 55,691,280 | |
VeriSign, Inc. (b) | 29,100 | 6,219,252 | |
277,315,961 | |||
IT Consulting & Other Services - 23.4% | |||
Accenture PLC Class A | 884,780 | 279,608,176 | |
CI&T, Inc. Class A (a) | 297,556 | 4,960,259 | |
Cognizant Technology Solutions Corp. Class A | 1,929,832 | 166,216,430 | |
DXC Technology Co. (b) | 2,275,700 | 77,442,071 | |
EPAM Systems, Inc. (b) | 154,200 | 32,035,050 | |
Gartner, Inc. (b) | 218,500 | 61,271,770 | |
Globant SA (b) | 167,200 | 45,812,800 | |
Liveramp Holdings, Inc. (b) | 48,500 | 2,093,260 | |
Thoughtworks Holding, Inc. (a) | 145,700 | 3,330,702 | |
672,770,518 | |||
TOTAL IT SERVICES | 2,564,987,393 | ||
Media - 2.1% | |||
Advertising - 2.1% | |||
S4 Capital PLC (b) | 9,612,388 | 59,982,742 | |
Professional Services - 1.2% | |||
Human Resource & Employment Services - 1.2% | |||
Alight, Inc. (d) | 2,500,000 | 26,100,000 | |
Alight, Inc. Class A (b) | 699,600 | 7,303,824 | |
33,403,824 | |||
Research & Consulting Services - 0.0% | |||
Science Applications International Corp. | 800 | 70,152 | |
TOTAL PROFESSIONAL SERVICES | 33,473,976 | ||
Software - 4.3% | |||
Application Software - 3.6% | |||
Adobe, Inc. (b) | 11,869 | 5,550,894 | |
AvidXchange Holdings, Inc. (a) | 45,600 | 439,128 | |
Bill.Com Holdings, Inc. (b) | 22,000 | 5,233,360 | |
Intuit, Inc. | 179,456 | 85,128,543 | |
Qualtrics International, Inc. | 203,200 | 6,163,056 | |
Riskified Ltd. (b) | 15,100 | 113,703 | |
102,628,684 | |||
Systems Software - 0.7% | |||
UiPath, Inc. Class A (b) | 576,900 | 20,024,199 | |
TOTAL SOFTWARE | 122,652,883 | ||
TOTAL COMMON STOCKS | |||
(Cost $1,635,236,245) | 2,879,256,430 | ||
Money Market Funds - 3.0% | |||
Fidelity Cash Central Fund 0.07% (e) | 1,591,097 | 1,591,416 | |
Fidelity Securities Lending Cash Central Fund 0.07% (e)(f) | 84,121,388 | 84,129,800 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $85,721,216) | 85,721,216 | ||
TOTAL INVESTMENT IN SECURITIES - 103.2% | |||
(Cost $1,720,957,461) | 2,964,977,646 | ||
NET OTHER ASSETS (LIABILITIES) - (3.2)% | (91,138,693) | ||
NET ASSETS - 100% | $2,873,838,953 |
Legend
(a) Security or a portion of the security is on loan at period end.
(b) Non-income producing
(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 $21,367,687 or 0.7% of net assets.
(d) Restricted securities (including private placements) - 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 $26,100,000 or 0.9% 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 |
Alight, Inc. | 1/25/21 | $25,000,000 |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $-- | $566,133,398 | $564,541,982 | $4,209 | $-- | $-- | $1,591,416 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 136,234,240 | 453,793,181 | 505,897,621 | 213,816 | -- | -- | 84,129,800 | 0.2% |
Total | $136,234,240 | $1,019,926,579 | $1,070,439,603 | $218,025 | $-- | $-- | $85,721,216 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $2,879,256,430 | $2,800,723,652 | $78,532,778 | $-- |
Money Market Funds | 85,721,216 | 85,721,216 | -- | -- |
Total Investments in Securities: | $2,964,977,646 | $2,886,444,868 | $78,532,778 | $-- |
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 | 80.2% |
Ireland | 9.7% |
Bailiwick of Jersey | 3.2% |
United Kingdom | 2.1% |
Luxembourg | 1.6% |
Israel | 1.4% |
Others (Individually Less Than 1%) | 1.8% |
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, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $82,558,924) — See accompanying schedule: Unaffiliated issuers (cost $1,635,236,245) | $2,879,256,430 | |
Fidelity Central Funds (cost $85,721,216) | 85,721,216 | |
Total Investment in Securities (cost $1,720,957,461) | $2,964,977,646 | |
Receivable for investments sold | 566,448 | |
Receivable for fund shares sold | 781,691 | |
Dividends receivable | 1,460,989 | |
Distributions receivable from Fidelity Central Funds | 24,605 | |
Prepaid expenses | 11,286 | |
Other receivables | 45,106 | |
Total assets | 2,967,867,771 | |
Liabilities | ||
Payable for investments purchased | $5,868,763 | |
Payable for fund shares redeemed | 2,198,213 | |
Accrued management fee | 1,331,964 | |
Other affiliated payables | 476,124 | |
Other payables and accrued expenses | 40,044 | |
Collateral on securities loaned | 84,113,710 | |
Total liabilities | 94,028,818 | |
Net Assets | $2,873,838,953 | |
Net Assets consist of: | ||
Paid in capital | $1,339,477,687 | |
Total accumulated earnings (loss) | 1,534,361,266 | |
Net Assets | $2,873,838,953 | |
Net Asset Value, offering price and redemption price per share ($2,873,838,953 ÷ 40,899,117 shares) | $70.27 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $15,835,048 | |
Income from Fidelity Central Funds (including $213,816 from security lending) | 218,025 | |
Total income | 16,053,073 | |
Expenses | ||
Management fee | $20,806,515 | |
Transfer agent fees | 5,751,163 | |
Accounting fees | 1,024,905 | |
Custodian fees and expenses | 25,179 | |
Independent trustees' fees and expenses | 14,861 | |
Registration fees | 46,796 | |
Audit | 47,240 | |
Legal | 3,436 | |
Interest | 7,502 | |
Miscellaneous | 21,793 | |
Total expenses before reductions | 27,749,390 | |
Expense reductions | (90,818) | |
Total expenses after reductions | 27,658,572 | |
Net investment income (loss) | (11,605,499) | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 758,516,939 | |
Foreign currency transactions | (32,195) | |
Total net realized gain (loss) | 758,484,744 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | (1,178,779,085) | |
Unfunded commitments | 1,600,000 | |
Assets and liabilities in foreign currencies | (359) | |
Total change in net unrealized appreciation (depreciation) | (1,177,179,444) | |
Net gain (loss) | (418,694,700) | |
Net increase (decrease) in net assets resulting from operations | $(430,300,199) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(11,605,499) | $(4,189,911) |
Net realized gain (loss) | 758,484,744 | 390,511,242 |
Change in net unrealized appreciation (depreciation) | (1,177,179,444) | 769,091,316 |
Net increase (decrease) in net assets resulting from operations | (430,300,199) | 1,155,412,647 |
Distributions to shareholders | (528,547,016) | (223,164,335) |
Share transactions | ||
Proceeds from sales of shares | 283,388,277 | 802,890,356 |
Reinvestment of distributions | 495,301,813 | 210,531,333 |
Cost of shares redeemed | (1,081,314,912) | (1,909,473,070) |
Net increase (decrease) in net assets resulting from share transactions | (302,624,822) | (896,051,381) |
Total increase (decrease) in net assets | (1,261,472,037) | 36,196,931 |
Net Assets | ||
Beginning of period | 4,135,310,990 | 4,099,114,059 |
End of period | $2,873,838,953 | $4,135,310,990 |
Other Information | ||
Shares | ||
Sold | 3,049,821 | 10,373,759 |
Issued in reinvestment of distributions | 5,895,522 | 2,363,917 |
Redeemed | (12,068,264) | (24,393,398) |
Net increase (decrease) | (3,122,921) | (11,655,722) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
IT Services Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $93.94 | $73.62 | $64.96 | $58.69 | $44.84 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | (.27) | (.09) | .03 | .04 | .04 |
Net realized and unrealized gain (loss) | (10.44) | 25.34 | 10.36 | 8.92 | 15.50 |
Total from investment operations | (10.71) | 25.25 | 10.39 | 8.96 | 15.54 |
Distributions from net investment income | – | (.01) | (.03) | (.03) | (.02) |
Distributions from net realized gain | (12.96) | (4.93) | (1.70) | (2.66) | (1.67) |
Total distributions | (12.96) | (4.93)D | (1.73) | (2.69) | (1.69) |
Net asset value, end of period | $70.27 | $93.94 | $73.62 | $64.96 | $58.69 |
Total ReturnE | (13.31)% | 34.67% | 15.99% | 16.04% | 35.17% |
Ratios to Average Net AssetsC,F,G | |||||
Expenses before reductions | .70% | .72% | .73% | .74% | .77% |
Expenses net of fee waivers, if any | .70% | .72% | .73% | .74% | .77% |
Expenses net of all reductions | .70% | .72% | .73% | .74% | .77% |
Net investment income (loss) | (.29)% | (.11)% | .04% | .06% | .08% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $2,873,839 | $4,135,311 | $4,099,114 | $2,867,321 | $2,284,152 |
Portfolio turnover rateH | 41% | 31% | 24% | 26% | 26% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
H Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Semiconductors Portfolio | 24.57% | 29.18% | 23.92% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Semiconductors Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789796726_740.jpg)
Period Ending Values | ||
$85,420 | Semiconductors Portfolio | |
$39,037 | S&P 500® Index |
Semiconductors Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Adam Benjamin: For the fiscal year ending February 28, 2022, the fund gained 24.57%, outperforming the 21.64% advance of the MSCI U.S. IMI Semiconductors & Semiconductor Equipment 25/50 Index, as well as the broad-based S&P 500® index. Versus the industry index, security selection was the primary contributor, especially in the semiconductors category. An underweighting in semiconductor equipment segment also helped. The biggest individual relative contributor was an underweight position in Intel (-19%), which we pared back during the period. Also lifting performance was our outsized stake in Marvell Technology, which gained 44%. Marvell Technology was among the fund's largest holdings. Another notable relative contributor was an overweighting in Nvidia (+78%), which was among the fund's biggest holdings. In contrast, the largest detractor from performance versus the industry index was stock picking in semiconductor equipment. Out-of-index holdings in electrical components & equipment and technology hardware, storage & peripherals also hampered the fund's relative result. The biggest individual relative detractor was untimely positioning in Micron Technology (-3%); we pared this position the past 12 months. Also hindering performance was our outsized stake in Microchip Technology, which returned about -7%. Microchip Technology was one of the fund's biggest holdings. Also hurting performance was our overweighting in NXP Semiconductors, which gained 5%. NXP Semiconductors was one of our largest holdings. Notable changes in positioning include reduced exposure to the semiconductor equipment subindustry.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, 2022
% of fund's net assets | |
NVIDIA Corp. | 23.3 |
NXP Semiconductors NV | 8.3 |
Marvell Technology, Inc. | 8.1 |
Microchip Technology, Inc. | 5.5 |
Advanced Micro Devices, Inc. | 5.0 |
onsemi | 4.9 |
Analog Devices, Inc. | 4.6 |
Broadcom, Inc. | 4.5 |
Teradyne, Inc. | 3.5 |
GlobalFoundries, Inc. | 3.5 |
71.2 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Semiconductors & Semiconductor Equipment | 94.4% | |
Software | 2.3% | |
Electronic Equipment & Components | 1.5% | |
Technology Hardware, Storage & Peripherals | 0.8% | |
Electrical Equipment | 0.1% | |
All Others* | 0.9% |
* Includes short-term investments and net other assets (liabilities).
Semiconductors Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 98.9% | |||
Shares | Value | ||
Electrical Equipment - 0.1% | |||
Electrical Components & Equipment - 0.1% | |||
Array Technologies, Inc. (a) | 983,600 | $11,055,664 | |
Electronic Equipment & Components - 1.5% | |||
Electronic Equipment & Instruments - 0.1% | |||
Aeva Technologies, Inc. (a)(b) | 1,097,800 | 4,610,760 | |
Electronic Manufacturing Services - 1.4% | |||
Flex Ltd. (a) | 1,850,000 | 30,506,500 | |
Jabil, Inc. | 1,529,758 | 88,435,310 | |
118,941,810 | |||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 123,552,570 | ||
Semiconductors & Semiconductor Equipment - 94.2% | |||
Semiconductor Equipment - 10.3% | |||
Applied Materials, Inc. | 687,700 | 92,289,340 | |
KLA Corp. | 234,113 | 81,588,381 | |
Lam Research Corp. | 508,873 | 285,655,859 | |
Nova Ltd. (a)(b) | 1,008,970 | 105,719,877 | |
Teradyne, Inc. | 2,533,522 | 298,752,914 | |
864,006,371 | |||
Semiconductors - 83.9% | |||
Advanced Micro Devices, Inc. (a) | 3,449,118 | 425,414,214 | |
Allegro MicroSystems LLC (a) | 3,488,100 | 100,003,827 | |
Alpha & Omega Semiconductor Ltd. (a) | 742,296 | 39,913,256 | |
Analog Devices, Inc. | 2,429,338 | 389,398,588 | |
ASE Technology Holding Co. Ltd. ADR (b) | 1,396,600 | 10,097,418 | |
Broadcom, Inc. | 647,150 | 380,161,796 | |
Cirrus Logic, Inc. (a) | 1,347,879 | 117,090,249 | |
Diodes, Inc. (a) | 809,700 | 72,541,023 | |
GlobalFoundries, Inc. | 4,831,893 | 293,682,457 | |
Intel Corp. | 1,089,542 | 51,971,153 | |
MACOM Technology Solutions Holdings, Inc. (a) | 1,691,900 | 101,683,190 | |
Marvell Technology, Inc. | 10,045,277 | 686,393,777 | |
MaxLinear, Inc. Class A (a)(b) | 817,731 | 50,167,797 | |
Microchip Technology, Inc. | 6,543,398 | 460,197,181 | |
Micron Technology, Inc. | 272,160 | 24,184,138 | |
Monolithic Power Systems, Inc. | 122,100 | 56,007,270 | |
NVIDIA Corp. | 8,044,668 | 1,961,692,290 | |
NXP Semiconductors NV | 3,680,088 | 699,658,331 | |
onsemi (a) | 6,626,209 | 414,866,945 | |
Qualcomm, Inc. | 1,208,888 | 207,916,647 | |
SMART Global Holdings, Inc. (a)(b) | 900,200 | 24,710,490 | |
Synaptics, Inc. (a) | 280,911 | 64,168,500 | |
Taiwan Semiconductor Manufacturing Co. Ltd. sponsored ADR | 2,344,600 | 250,895,646 | |
Texas Instruments, Inc. | 855,735 | 145,466,393 | |
Wolfspeed, Inc. (a)(b) | 407,200 | 41,827,584 | |
7,070,110,160 | |||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 7,934,116,531 | ||
Software - 2.3% | |||
Application Software - 2.3% | |||
Cadence Design Systems, Inc. (a) | 1,303,800 | 197,434,434 | |
Technology Hardware, Storage & Peripherals - 0.8% | |||
Technology Hardware, Storage & Peripherals - 0.8% | |||
IonQ, Inc. (c) | 155,600 | 2,486,488 | |
Samsung Electronics Co. Ltd. | 1,114,470 | 67,157,589 | |
69,644,077 | |||
TOTAL COMMON STOCKS | |||
(Cost $5,003,037,119) | 8,335,803,276 | ||
Convertible Preferred Stocks - 0.2% | |||
Electronic Equipment & Components - 0.0% | |||
Electronic Components - 0.0% | |||
Menlo Micro, Inc. Series C (c)(d) | 739,500 | 980,207 | |
Metals & Mining - 0.1% | |||
Precious Metals & Minerals - 0.1% | |||
Diamond Foundry, Inc. Series C (c)(d) | 189,999 | 5,204,073 | |
Semiconductors & Semiconductor Equipment - 0.1% | |||
Semiconductor Equipment - 0.0% | |||
Astera Labs, Inc. Series C (c)(d) | 185,800 | 750,632 | |
Semiconductors - 0.1% | |||
GaN Systems, Inc.: | |||
Series F1 (c)(d) | 496,628 | 4,211,405 | |
Series F2 (c)(d) | 262,241 | 2,223,804 | |
SiMa.ai Series B (c)(d) | 309,900 | 2,023,647 | |
8,458,856 | |||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 9,209,488 | ||
Software - 0.0% | |||
Systems Software - 0.0% | |||
Tenstorrent, Inc. Series C1 (c)(d) | 8,800 | 660,352 | |
TOTAL CONVERTIBLE PREFERRED STOCKS | |||
(Cost $14,712,193) | 16,054,120 | ||
Preferred Securities - 0.1% | |||
Semiconductors & Semiconductor Equipment - 0.1% | |||
Semiconductors - 0.1% | |||
GaN Systems, Inc. 0% (c)(d)(e) | 11,640,267 | 11,640,267 | |
Software - 0.0% | |||
Systems Software - 0.0% | |||
Tenstorrent, Inc. 0% (c)(d)(e) | 490,000 | 490,000 | |
TOTAL PREFERRED SECURITIES | |||
(Cost $12,130,267) | 12,130,267 | ||
Money Market Funds - 2.0% | |||
Fidelity Cash Central Fund 0.07% (f) | 56,296,373 | 56,307,633 | |
Fidelity Securities Lending Cash Central Fund 0.07% (f)(g) | 109,280,761 | 109,291,689 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $165,599,322) | 165,599,322 | ||
TOTAL INVESTMENT IN SECURITIES - 101.2% | |||
(Cost $5,195,478,901) | 8,529,586,985 | ||
NET OTHER ASSETS (LIABILITIES) - (1.2)% | (102,663,966) | ||
NET ASSETS - 100% | $8,426,923,019 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Restricted securities (including private placements) - 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 $30,670,875 or 0.4% of net assets.
(d) Level 3 security
(e) Security is perpetual in nature with no stated maturity date.
(f) 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.
(g) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
Security | Acquisition Date | Acquisition Cost |
Astera Labs, Inc. Series C | 8/24/21 | $624,622 |
Diamond Foundry, Inc. Series C | 3/15/21 | $4,559,976 |
GaN Systems, Inc. Series F1 | 11/30/21 | $4,211,405 |
GaN Systems, Inc. Series F2 | 11/30/21 | $2,223,804 |
GaN Systems, Inc. 0% | 11/30/21 | $11,640,267 |
IonQ, Inc. | 3/7/21 | $1,556,000 |
Menlo Micro, Inc. Series C | 2/9/22 | $980,207 |
SiMa.ai Series B | 5/10/21 | $1,588,981 |
Tenstorrent, Inc. Series C1 | 4/23/21 | $523,198 |
Tenstorrent, Inc. 0% | 4/23/21 | $490,000 |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $71,828,946 | $2,088,056,422 | $2,103,577,735 | $74,338 | $-- | $-- | $56,307,633 | 0.1% |
Fidelity Securities Lending Cash Central Fund 0.07% | 17,131,154 | 732,192,402 | 640,031,867 | 73,338 | -- | -- | 109,291,689 | 0.3% |
Total | $88,960,100 | $2,820,248,824 | $2,743,609,602 | $147,676 | $-- | $-- | $165,599,322 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $8,335,803,276 | $8,268,645,687 | $67,157,589 | $-- |
Convertible Preferred Stocks | 16,054,120 | -- | -- | 16,054,120 |
Preferred Securities | 12,130,267 | -- | -- | 12,130,267 |
Money Market Funds | 165,599,322 | 165,599,322 | -- | -- |
Total Investments in Securities: | $8,529,586,985 | $8,434,245,009 | $67,157,589 | $28,184,387 |
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 | 81.9% |
Netherlands | 8.3% |
Cayman Islands | 3.5% |
Taiwan | 3.1% |
Israel | 1.3% |
Others (Individually Less Than 1%) | 1.9% |
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, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $105,813,090) — See accompanying schedule: Unaffiliated issuers (cost $5,029,879,579) | $8,363,987,663 | |
Fidelity Central Funds (cost $165,599,322) | 165,599,322 | |
Total Investment in Securities (cost $5,195,478,901) | $8,529,586,985 | |
Receivable for investments sold | 26,272,197 | |
Receivable for fund shares sold | 10,537,337 | |
Dividends receivable | 5,142,210 | |
Interest receivable | 3,590 | |
Distributions receivable from Fidelity Central Funds | 12,131 | |
Prepaid expenses | 17,771 | |
Other receivables | 318,343 | |
Total assets | 8,571,890,564 | |
Liabilities | ||
Payable for investments purchased | $18,012,872 | |
Payable for fund shares redeemed | 12,574,044 | |
Accrued management fee | 3,718,687 | |
Other affiliated payables | 1,060,525 | |
Other payables and accrued expenses | 309,728 | |
Collateral on securities loaned | 109,291,689 | |
Total liabilities | 144,967,545 | |
Net Assets | $8,426,923,019 | |
Net Assets consist of: | ||
Paid in capital | $4,827,210,540 | |
Total accumulated earnings (loss) | 3,599,712,479 | |
Net Assets | $8,426,923,019 | |
Net Asset Value, offering price and redemption price per share ($8,426,923,019 ÷ 416,578,329 shares) | $20.23 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $51,195,671 | |
Interest | 80,775 | |
Income from Fidelity Central Funds (including $73,338 from security lending) | 147,676 | |
Total income | 51,424,122 | |
Expenses | ||
Management fee | $38,472,539 | |
Transfer agent fees | 9,362,740 | |
Accounting fees | 1,176,708 | |
Custodian fees and expenses | 67,247 | |
Independent trustees' fees and expenses | 24,794 | |
Registration fees | 343,233 | |
Audit | 40,840 | |
Legal | 6,469 | |
Interest | 48 | |
Miscellaneous | 30,319 | |
Total expenses before reductions | 49,524,937 | |
Expense reductions | (176,646) | |
Total expenses after reductions | 49,348,291 | |
Net investment income (loss) | 2,075,831 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 704,159,864 | |
Foreign currency transactions | (36,065) | |
Total net realized gain (loss) | 704,123,799 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | 616,656,053 | |
Assets and liabilities in foreign currencies | 4,221 | |
Total change in net unrealized appreciation (depreciation) | 616,660,274 | |
Net gain (loss) | 1,320,784,073 | |
Net increase (decrease) in net assets resulting from operations | $1,322,859,904 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $2,075,831 | $22,689,307 |
Net realized gain (loss) | 704,123,799 | 401,601,319 |
Change in net unrealized appreciation (depreciation) | 616,660,274 | 1,906,111,692 |
Net increase (decrease) in net assets resulting from operations | 1,322,859,904 | 2,330,402,318 |
Distributions to shareholders | (613,939,297) | (410,556,842) |
Share transactions | ||
Proceeds from sales of shares | 3,146,391,881 | 950,485,975 |
Reinvestment of distributions | 580,580,568 | 392,773,812 |
Cost of shares redeemed | (1,726,756,170) | (1,323,875,912) |
Net increase (decrease) in net assets resulting from share transactions | 2,000,216,279 | 19,383,875 |
Total increase (decrease) in net assets | 2,709,136,886 | 1,939,229,351 |
Net Assets | ||
Beginning of period | 5,717,786,133 | 3,778,556,782 |
End of period | $8,426,923,019 | $5,717,786,133 |
Other Information | ||
Shares | ||
Sold | 150,199,767 | 69,181,684 |
Issued in reinvestment of distributions | 28,114,026 | 32,498,838 |
Redeemed | (86,759,172) | (106,078,454) |
Net increase (decrease) | 91,554,621 | (4,397,932) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Semiconductors Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B | 2018 B |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $17.59 | $11.47 | $9.41 | $11.77 | $10.12 |
Income from Investment Operations | |||||
Net investment income (loss)C,D | .01 | .07 | .09 | .10 | .05 |
Net realized and unrealized gain (loss) | 4.30 | 7.37 | 2.39 | (.35) | 3.24 |
Total from investment operations | 4.31 | 7.44 | 2.48 | (.25) | 3.29 |
Distributions from net investment income | (.01) | (.08) | (.10) | (.06) | (.12) |
Distributions from net realized gain | (1.66) | (1.24) | (.33) | (2.05) | (1.52) |
Total distributions | (1.67) | (1.32) | (.42)E | (2.11) | (1.64) |
Redemption fees added to paid in capitalC | – | – | – | – | –F |
Net asset value, end of period | $20.23 | $17.59 | $11.47 | $9.41 | $11.77 |
Total ReturnG | 24.57% | 70.47% | 26.01% | .19% | 34.20% |
Ratios to Average Net AssetsD,H,I | |||||
Expenses before reductions | .68% | .70% | .72% | .73% | .75% |
Expenses net of fee waivers, if any | .67% | .70% | .72% | .73% | .75% |
Expenses net of all reductions | .67% | .69% | .71% | .72% | .74% |
Net investment income (loss) | .03% | .53% | .85% | .92% | .47% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $8,426,923 | $5,717,786 | $3,778,557 | $3,052,506 | $3,652,565 |
Portfolio turnover rateJ | 33% | 87% | 114% | 130% | 110% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on May 11, 2018.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
E Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Software and IT Services Portfolio | 2.98% | 22.54% | 19.88% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Software and IT Services Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789796900_740.jpg)
Period Ending Values | ||
$61,316 | Software and IT Services Portfolio | |
$39,037 | S&P 500® Index |
Software and IT Services Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Ali Khan: For the fiscal year ending February 28, 2022, the fund gained 2.98%, outperforming the 0.64% advance of the MSCI U.S. IMI Software & Services 25/50 Index, but underperforming the broad-based S&P 500® index. The top contributor to performance versus the industry index was stock selection in systems software. An underweighting in data processing & outsourced services and stock selection in application software also bolstered the fund's relative result. Our non-index stake in Alphabet was the fund's biggest individual relative contributor, driven by a gain of roughly 34%. This was among the fund's largest holdings. Also lifting performance was our overweighting in Microsoft, which gained about 30%. The company was the fund's biggest holding. Another notable relative contributor was an underweighting in Block (-45%), a stake we established the past 12 months. In contrast, the largest detractor from performance versus the industry index was security selection in data processing & outsourced services. An underweighting in systems software and stock picks in internet & direct marketing retail also hindered the fund's relative result. Our non-index stake in Twitter was the fund's largest individual relative detractor, due to its -54% result. We increased our stake. Our second-largest relative detractor this period was avoiding Fortinet, an index component that gained approximately 104%. Also hurting performance was an underweighting in Accenture, which gained roughly 27%.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, 2022
% of fund's net assets | |
Microsoft Corp. | 24.9 |
Visa, Inc. Class A | 6.9 |
MasterCard, Inc. Class A | 6.2 |
Adobe, Inc. | 5.9 |
Salesforce.com, Inc. | 5.4 |
Alphabet, Inc. Class A | 3.0 |
PayPal Holdings, Inc. | 2.7 |
Cognizant Technology Solutions Corp. Class A | 2.7 |
Palo Alto Networks, Inc. | 2.5 |
Autodesk, Inc. | 2.2 |
62.4 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Software | 59.0% | |
IT Services | 33.3% | |
Interactive Media & Services | 4.4% | |
Entertainment | 1.4% | |
Internet & Direct Marketing Retail | 0.3% | |
All Others* | 1.6% |
* Includes short-term investments and net other assets (liabilities).
Software and IT Services Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
Entertainment - 1.4% | |||
Interactive Home Entertainment - 1.4% | |||
Activision Blizzard, Inc. | 814,900 | $66,414,350 | |
Electronic Arts, Inc. | 717,300 | 93,313,557 | |
159,727,907 | |||
Interactive Media & Services - 4.4% | |||
Interactive Media & Services - 4.4% | |||
Alphabet, Inc. Class A (a) | 124,800 | 337,102,272 | |
Meta Platforms, Inc. Class A (a) | 420,300 | 88,695,909 | |
Twitter, Inc. (a) | 2,062,242 | 73,312,703 | |
499,110,884 | |||
Internet & Direct Marketing Retail - 0.3% | |||
Internet & Direct Marketing Retail - 0.3% | |||
Alibaba Group Holding Ltd. sponsored ADR (a) | 352,800 | 37,111,032 | |
IT Services - 33.3% | |||
Data Processing & Outsourced Services - 19.6% | |||
Automatic Data Processing, Inc. | 66,200 | 13,533,928 | |
Block, Inc. Class A (a) | 531,600 | 67,779,000 | |
ExlService Holdings, Inc. (a) | 347,200 | 41,938,288 | |
Fidelity National Information Services, Inc. | 611,200 | 58,204,576 | |
Fiserv, Inc. (a) | 272,400 | 26,605,308 | |
FleetCor Technologies, Inc. (a) | 153,200 | 35,879,440 | |
Global Payments, Inc. | 1,168,870 | 155,903,881 | |
MasterCard, Inc. Class A | 1,947,200 | 702,588,704 | |
PayPal Holdings, Inc. (a) | 2,706,500 | 302,938,545 | |
StoneCo Ltd. Class A (a) | 319,600 | 3,592,304 | |
Visa, Inc. Class A | 3,585,320 | 774,859,358 | |
WEX, Inc. (a) | 114,700 | 19,328,097 | |
2,203,151,429 | |||
Internet Services & Infrastructure - 5.3% | |||
Akamai Technologies, Inc. (a) | 1,122,900 | 121,565,154 | |
GoDaddy, Inc. (a) | 1,471,200 | 122,712,792 | |
MongoDB, Inc. Class A (a) | 346,200 | 132,244,938 | |
Snowflake Computing, Inc. (a) | 240,900 | 63,997,494 | |
Twilio, Inc. Class A (a) | 642,000 | 112,221,600 | |
Wix.com Ltd. (a) | 472,300 | 43,253,234 | |
595,995,212 | |||
IT Consulting & Other Services - 8.4% | |||
Accenture PLC Class A | 655,900 | 207,277,518 | |
Capgemini SA | 691,100 | 144,667,702 | |
Cognizant Technology Solutions Corp. Class A | 3,475,800 | 299,370,654 | |
DXC Technology Co. (a) | 707,800 | 24,086,434 | |
Gartner, Inc. (a) | 347,300 | 97,389,866 | |
IBM Corp. | 1,317,900 | 161,455,929 | |
Kyndryl Holdings, Inc. (a) | 281,400 | 4,463,004 | |
Liveramp Holdings, Inc. (a) | 265,300 | 11,450,348 | |
Thoughtworks Holding, Inc. | 46,100 | 1,053,846 | |
951,215,301 | |||
TOTAL IT SERVICES | 3,750,361,942 | ||
Media - 0.2% | |||
Publishing - 0.2% | |||
The New York Times Co. Class A | 520,700 | 22,905,593 | |
Professional Services - 0.2% | |||
Research & Consulting Services - 0.2% | |||
CACI International, Inc. Class A (a) | 88,700 | 24,817,373 | |
Road & Rail - 0.3% | |||
Trucking - 0.3% | |||
Uber Technologies, Inc. (a) | 725,900 | 26,154,177 | |
Software - 59.0% | |||
Application Software - 27.1% | |||
Adobe, Inc. (a) | 1,415,000 | 661,767,200 | |
Alteryx, Inc. Class A (a) | 412,500 | 25,698,750 | |
Anaplan, Inc. (a) | 2,877,700 | 136,316,649 | |
Aspen Technology, Inc. (a) | 486,100 | 74,086,501 | |
Autodesk, Inc. (a) | 1,125,000 | 247,758,750 | |
Avalara, Inc. (a) | 215,100 | 22,351,041 | |
AvidXchange Holdings, Inc. | 36,300 | 349,569 | |
Blackbaud, Inc. (a) | 646,300 | 40,387,287 | |
Braze, Inc. | 15,500 | 653,945 | |
Ceridian HCM Holding, Inc. (a) | 981,542 | 71,564,227 | |
Citrix Systems, Inc. | 258,907 | 26,537,968 | |
Constellation Software, Inc. | 25,200 | 42,470,400 | |
Coupa Software, Inc. (a) | 424,300 | 51,344,543 | |
DocuSign, Inc. (a) | 94,700 | 11,215,321 | |
Dropbox, Inc. Class A (a) | 213,000 | 4,832,970 | |
Elastic NV (a) | 735,700 | 63,748,405 | |
Everbridge, Inc. (a) | 473,000 | 18,692,960 | |
Five9, Inc. (a) | 323,000 | 35,530,000 | |
HashiCorp, Inc. | 16,900 | 851,591 | |
HubSpot, Inc. (a) | 200,800 | 105,420,000 | |
Intuit, Inc. | 263,800 | 125,138,806 | |
Micro Focus International PLC | 1,263,938 | 6,569,236 | |
Mimecast Ltd. (a) | 692,300 | 55,058,619 | |
Momentive Global, Inc. (a) | 850,700 | 13,373,004 | |
New Relic, Inc. (a) | 473,100 | 31,338,144 | |
PTC, Inc. (a) | 934,400 | 103,980,032 | |
Qualtrics International, Inc. | 877,200 | 26,605,476 | |
Salesforce.com, Inc. (a) | 2,898,284 | 610,175,731 | |
Samsara, Inc. | 69,800 | 1,220,104 | |
SAP SE | 73,900 | 8,336,218 | |
Smartsheet, Inc. (a) | 313,700 | 16,679,429 | |
Workday, Inc. Class A (a) | 872,300 | 199,800,315 | |
Workiva, Inc. (a) | 226,100 | 23,808,330 | |
Zendesk, Inc. (a) | 1,178,100 | 137,448,927 | |
Zoom Video Communications, Inc. Class A (a) | 406,900 | 53,954,940 | |
3,055,065,388 | |||
Systems Software - 31.9% | |||
GitLab, Inc. (b) | 11,200 | 652,624 | |
Mandiant, Inc. (a) | 3,422,300 | 67,761,540 | |
Microsoft Corp. | 9,385,700 | 2,804,353,303 | |
NortonLifeLock, Inc. | 4,479,100 | 129,804,318 | |
Oracle Corp. | 2,560,727 | 194,538,430 | |
Palo Alto Networks, Inc. (a) | 478,400 | 284,289,200 | |
Tenable Holdings, Inc. (a) | 1,617,600 | 89,550,336 | |
Zuora, Inc. (a) | 1,207,700 | 18,332,886 | |
3,589,282,637 | |||
TOTAL SOFTWARE | 6,644,348,025 | ||
TOTAL COMMON STOCKS | |||
(Cost $5,594,401,717) | 11,164,536,933 | ||
Money Market Funds - 0.4% | |||
Fidelity Cash Central Fund 0.07% (c) | 46,695,433 | 46,704,772 | |
Fidelity Securities Lending Cash Central Fund 0.07% (c)(d) | 582,442 | 582,500 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $47,287,272) | 47,287,272 | ||
TOTAL INVESTMENT IN SECURITIES - 99.5% | |||
(Cost $5,641,688,989) | 11,211,824,205 | ||
NET OTHER ASSETS (LIABILITIES) - 0.5% | 56,467,137 | ||
NET ASSETS - 100% | $11,268,291,342 |
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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $285,645,129 | $1,302,057,064 | $1,540,997,421 | $240,760 | $3,845 | $(3,845) | $46,704,772 | 0.1% |
Fidelity Securities Lending Cash Central Fund 0.07% | 328,019,373 | 710,517,364 | 1,037,954,237 | 128,692 | -- | -- | 582,500 | 0.0% |
Total | $613,664,502 | $2,012,574,428 | $2,578,951,658 | $369,452 | $3,845 | $(3,845) | $47,287,272 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $11,164,536,933 | $11,004,963,777 | $159,573,156 | $-- |
Money Market Funds | 47,287,272 | 47,287,272 | -- | -- |
Total Investments in Securities: | $11,211,824,205 | $11,052,251,049 | $159,573,156 | $-- |
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, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $582,700) — See accompanying schedule: Unaffiliated issuers (cost $5,594,401,717) | $11,164,536,933 | |
Fidelity Central Funds (cost $47,287,272) | 47,287,272 | |
Total Investment in Securities (cost $5,641,688,989) | $11,211,824,205 | |
Receivable for investments sold | 55,765,664 | |
Receivable for fund shares sold | 5,231,978 | |
Dividends receivable | 11,269,408 | |
Distributions receivable from Fidelity Central Funds | 6,035 | |
Prepaid expenses | 28,878 | |
Other receivables | 500,633 | |
Total assets | 11,284,626,801 | |
Liabilities | ||
Payable for fund shares redeemed | $8,784,508 | |
Accrued management fee | 5,036,837 | |
Transfer agent fee payable | 1,354,262 | |
Other affiliated payables | 112,395 | |
Other payables and accrued expenses | 464,957 | |
Collateral on securities loaned | 582,500 | |
Total liabilities | 16,335,459 | |
Net Assets | $11,268,291,342 | |
Net Assets consist of: | ||
Paid in capital | $5,308,858,977 | |
Total accumulated earnings (loss) | 5,959,432,365 | |
Net Assets | $11,268,291,342 | |
Net Asset Value, offering price and redemption price per share ($11,268,291,342 ÷ 428,035,796 shares) | $26.33 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $63,426,019 | |
Income from Fidelity Central Funds (including $128,692 from security lending) | 369,452 | |
Total income | 63,795,471 | |
Expenses | ||
Management fee | $66,941,753 | |
Transfer agent fees | 17,234,346 | |
Accounting fees | 1,399,125 | |
Custodian fees and expenses | 77,894 | |
Independent trustees' fees and expenses | 46,153 | |
Registration fees | 167,983 | |
Audit | 46,832 | |
Legal | 9,725 | |
Interest | 53 | |
Miscellaneous | 60,384 | |
Total expenses before reductions | 85,984,248 | |
Expense reductions | (296,031) | |
Total expenses after reductions | 85,688,217 | |
Net investment income (loss) | (21,892,746) | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 1,110,665,053 | |
Fidelity Central Funds | 3,845 | |
Foreign currency transactions | 36,062 | |
Total net realized gain (loss) | 1,110,704,960 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | (688,224,771) | |
Fidelity Central Funds | (3,845) | |
Assets and liabilities in foreign currencies | (3,889) | |
Total change in net unrealized appreciation (depreciation) | (688,232,505) | |
Net gain (loss) | 422,472,455 | |
Net increase (decrease) in net assets resulting from operations | $400,579,709 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(21,892,746) | $(11,246,033) |
Net realized gain (loss) | 1,110,704,960 | 607,832,908 |
Change in net unrealized appreciation (depreciation) | (688,232,505) | 3,210,428,137 |
Net increase (decrease) in net assets resulting from operations | 400,579,709 | 3,807,015,012 |
Distributions to shareholders | (831,854,738) | (582,570,452) |
Share transactions | ||
Proceeds from sales of shares | 1,277,423,928 | 3,371,109,496 |
Reinvestment of distributions | 783,418,638 | 551,671,834 |
Cost of shares redeemed | (2,255,819,953) | (3,284,592,962) |
Net increase (decrease) in net assets resulting from share transactions | (194,977,387) | 638,188,368 |
Total increase (decrease) in net assets | (626,252,416) | 3,862,632,928 |
Net Assets | ||
Beginning of period | 11,894,543,758 | 8,031,910,830 |
End of period | $11,268,291,342 | $11,894,543,758 |
Other Information | ||
Shares | ||
Sold | 42,971,848 | 150,289,904 |
Issued in reinvestment of distributions | 26,896,267 | 24,317,272 |
Redeemed | (77,442,780) | (142,668,627) |
Net increase (decrease) | (7,574,665) | 31,938,549 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Software and IT Services Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B | 2018 B |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $27.31 | $19.90 | $18.71 | $17.89 | $14.09 |
Income from Investment Operations | |||||
Net investment income (loss)C,D | (.05) | (.03) | .19E | .02 | (.02) |
Net realized and unrealized gain (loss) | 1.03 | 8.82 | 3.52 | 1.81 | 5.01 |
Total from investment operations | .98 | 8.79 | 3.71 | 1.83 | 4.99 |
Distributions from net investment income | – | (.15) | (.05) | (.01) | – |
Distributions from net realized gain | (1.96) | (1.23) | (2.47) | (1.00) | (1.19) |
Total distributions | (1.96) | (1.38) | (2.52) | (1.01) | (1.19) |
Net asset value, end of period | $26.33 | $27.31 | $19.90 | $18.71 | $17.89 |
Total ReturnF | 2.98% | 45.80% | 21.33% | 10.90% | 36.76% |
Ratios to Average Net AssetsD,G,H | |||||
Expenses before reductions | .67% | .70% | .70% | .72% | .73% |
Expenses net of fee waivers, if any | .67% | .70% | .70% | .72% | .73% |
Expenses net of all reductions | .67% | .69% | .70% | .71% | .73% |
Net investment income (loss) | (.17)% | (.11)% | .98%E | .10% | (.09)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $11,268,291 | $11,894,544 | $8,031,911 | $6,540,896 | $5,539,357 |
Portfolio turnover rateI | 10% | 22% | 23% | 48% | 31% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on May 11, 2018.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.15 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .22%.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the financial statements.
Tech Hardware 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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Tech Hardware Portfolio | 4.72% | 20.28% | 14.91% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Tech Hardware Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789796639_740.jpg)
Period Ending Values | ||
$40,131 | Tech Hardware Portfolio | |
$39,037 | S&P 500® Index |
Tech Hardware Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Elliot Mattingly: For the fiscal year ending February 28, 2022, the fund gained 4.72%, performing roughly in line with the 4.61% advance of the FactSet Hardware Technology Linked Index, but trailing the broad-based S&P 500® index. Versus the industry index, security selection was the primary contributor, especially in the systems software category. Non-index exposure to semiconductors firms, along with picks among technology hardware, storage & peripherals stocks, also helped. Our top individual relative contributor was an out-of-index stake in Nvidia (+131%), though the company was no longer held at period end. Non-index exposure to Alphabet, also not held on February 28, gained approximately 36% and added further value. Another key relative contributor was the portfolio’s smaller-than-index holding in Xiaomi (-14%). Conversely, the primary detractor from performance versus the industry index was an overweighting in the industrial machinery group. An underweighting in consumer electronics and outsized exposure to the systems software segment hurt as well. The biggest individual relative detractor was an underweight position in Sony (-1%), which was among the fund's biggest holdings the past 12 months. Further pressuring the portfolio’s relative result was our lighter-than-index stake in HP (+22%). The company was among our largest holdings by the end of the period. Another notable relative detractor was an underweighting in Hewlett Packard Enterprise (+13%), where we reduced our stake this past year. Notable changes in positioning include a lower allocation to the technology hardware, storage & peripherals, as well as consumer electronics categories. The fund's foreign holdings detracted overall, hampered in part by a broadly stronger U.S. dollar.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: Following Board approval in May 2021, Fidelity Select Computers Portfolio was repositioned with a broader, modernized mandate and renamed Fidelity Select Tech Hardware Portfolio, effective November 13, 2021. In conjunction with the repositioning, Fidelity changed the fund’s supplemental benchmark to the FactSet Technology Hardware Linked Index, which better reflects the fund’s updated investment focus. On January 1, 2022, Elliot Mattingly assumed portfolio management responsibilities for the fund, succeeding Caroline Tall.Tech Hardware Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
Apple, Inc. | 12.1 |
Cisco Systems, Inc. | 10.9 |
Samsung Electronics Co. Ltd. | 10.5 |
Sony Group Corp. | 9.9 |
Palo Alto Networks, Inc. | 5.6 |
Motorola Solutions, Inc. | 3.6 |
Fortinet, Inc. | 3.4 |
Nintendo Co. Ltd. | 2.9 |
Dell Technologies, Inc. | 2.6 |
Seagate Technology Holdings PLC | 2.1 |
63.6 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Technology Hardware, Storage & Peripherals | 38.1% | |
Communications Equipment | 23.7% | |
Household Durables | 13.9% | |
Software | 10.4% | |
Electronic Equipment & Components | 8.5% | |
All Others* | 5.4% |
* Includes short-term investments and net other assets (liabilities).
Tech Hardware Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 99.0% | |||
Shares | Value | ||
Building Products - 0.3% | |||
Building Products - 0.3% | |||
Resideo Technologies, Inc. (a) | 103,900 | $2,674,386 | |
Communications Equipment - 23.7% | |||
Communications Equipment - 23.7% | |||
Arista Networks, Inc. (a) | 115,084 | 14,124,259 | |
Calix, Inc. (a) | 138,437 | 7,522,667 | |
Ciena Corp. (a) | 196,819 | 13,466,356 | |
Cisco Systems, Inc. | 1,777,587 | 99,136,027 | |
CommScope Holding Co., Inc. (a) | 396,562 | 3,783,201 | |
Ericsson (B Shares) | 1,583,110 | 14,567,616 | |
Extreme Networks, Inc. (a) | 624,178 | 7,171,805 | |
Juniper Networks, Inc. | 156,737 | 5,296,143 | |
Motorola Solutions, Inc. | 149,464 | 32,946,350 | |
Nokia Corp. | 2,724,618 | 14,732,940 | |
Viavi Solutions, Inc. (a) | 215,269 | 3,530,412 | |
216,277,776 | |||
Electronic Equipment & Components - 8.5% | |||
Electronic Components - 1.2% | |||
AU Optronics Corp. | 3,610,634 | 2,704,066 | |
Kyocera Corp. | 147,069 | 8,416,187 | |
11,120,253 | |||
Electronic Equipment & Instruments - 4.4% | |||
Keysight Technologies, Inc. (a) | 113,238 | 17,820,264 | |
National Instruments Corp. | 92,200 | 3,701,830 | |
Zebra Technologies Corp. Class A (a) | 44,700 | 18,476,298 | |
39,998,392 | |||
Technology Distributors - 2.9% | |||
Arrow Electronics, Inc. (a) | 53,200 | 6,484,016 | |
CDW Corp. | 96,688 | 16,674,812 | |
TD SYNNEX Corp. | 29,700 | 3,024,351 | |
26,183,179 | |||
TOTAL ELECTRONIC EQUIPMENT & COMPONENTS | 77,301,824 | ||
Entertainment - 2.9% | |||
Interactive Home Entertainment - 2.9% | |||
Nintendo Co. Ltd. | 52,270 | 26,472,251 | |
Health Care Equipment & Supplies - 0.4% | |||
Health Care Equipment - 0.4% | |||
GN Store Nord A/S | 76,014 | 4,018,336 | |
Household Durables - 13.9% | |||
Consumer Electronics - 13.9% | |||
Garmin Ltd. | 108,400 | 11,971,696 | |
LG Electronics, Inc. | 73,354 | 7,658,693 | |
Panasonic Corp. | 709,836 | 7,413,038 | |
Sonos, Inc. (a)(b) | 326,403 | 8,940,178 | |
Sony Group Corp. | 887,581 | 90,686,105 | |
126,669,710 | |||
IT Services - 0.3% | |||
Internet Services & Infrastructure - 0.3% | |||
Cloudflare, Inc. (a) | 11,360 | 1,322,531 | |
Twilio, Inc. Class A (a) | 8,861 | 1,548,903 | |
2,871,434 | |||
Machinery - 0.5% | |||
Industrial Machinery - 0.5% | |||
Kornit Digital Ltd. (a)(b) | 51,372 | 4,871,607 | |
Software - 10.4% | |||
Application Software - 0.9% | |||
Jamf Holding Corp. (a)(b) | 81,623 | 2,792,323 | |
NCR Corp. (a) | 140,250 | 5,682,930 | |
8,475,253 | |||
Systems Software - 9.5% | |||
Fortinet, Inc. (a) | 90,900 | 31,316,868 | |
KnowBe4, Inc. (a) | 109,208 | 2,199,449 | |
Mandiant, Inc. (a) | 140,100 | 2,773,980 | |
Palo Alto Networks, Inc. (a) | 85,302 | 50,690,714 | |
86,981,011 | |||
TOTAL SOFTWARE | 95,456,264 | ||
Technology Hardware, Storage & Peripherals - 38.1% | |||
Technology Hardware, Storage & Peripherals - 38.1% | |||
Advantech Co. Ltd. | 295,000 | 3,885,960 | |
Apple, Inc. | 669,487 | 110,545,693 | |
ASUSTeK Computer, Inc. | 180,956 | 2,414,816 | |
Canon, Inc. | 490,300 | 11,538,212 | |
Dell Technologies, Inc. | 467,361 | 23,816,717 | |
FUJIFILM Holdings Corp. | 209,723 | 13,247,583 | |
Hewlett Packard Enterprise Co. | 391,693 | 6,235,753 | |
HP, Inc. | 492,661 | 16,927,832 | |
Logitech International SA (Reg.) | 195,344 | 14,617,383 | |
NetApp, Inc. | 105,562 | 8,273,950 | |
Pure Storage, Inc. Class A (a) | 158,752 | 4,118,027 | |
Samsung Electronics Co. Ltd. | 1,596,551 | 96,207,629 | |
Seagate Technology Holdings PLC | 186,844 | 19,274,827 | |
Western Digital Corp. (a) | 61,429 | 3,129,193 | |
Xiaomi Corp. Class B (a)(c) | 7,468,205 | 14,010,171 | |
348,243,746 | |||
TOTAL COMMON STOCKS | |||
(Cost $646,070,041) | 904,857,334 | ||
Money Market Funds - 1.7% | |||
Fidelity Cash Central Fund 0.07% (d) | 2,162,933 | 2,163,365 | |
Fidelity Securities Lending Cash Central Fund 0.07% (d)(e) | 13,139,511 | 13,140,825 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $15,304,190) | 15,304,190 | ||
TOTAL INVESTMENT IN SECURITIES - 100.7% | |||
(Cost $661,374,231) | 920,161,524 | ||
NET OTHER ASSETS (LIABILITIES) - (0.7)% | (6,512,596) | ||
NET ASSETS - 100% | $913,648,928 |
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 $14,010,171 or 1.5% 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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $10,715,475 | $237,388,464 | $245,940,574 | $7,039 | $-- | $-- | $2,163,365 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 289,425 | 208,771,450 | 195,920,050 | 31,779 | -- | -- | 13,140,825 | 0.0% |
Total | $11,004,900 | $446,159,914 | $441,860,624 | $38,818 | $-- | $-- | $15,304,190 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $904,857,334 | $607,940,289 | $296,917,045 | $-- |
Money Market Funds | 15,304,190 | 15,304,190 | -- | -- |
Total Investments in Securities: | $920,161,524 | $623,244,479 | $296,917,045 | $-- |
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 | 61.1% |
Japan | 17.2% |
Korea (South) | 11.4% |
Ireland | 2.1% |
Finland | 1.6% |
Switzerland | 1.6% |
Sweden | 1.6% |
Cayman Islands | 1.5% |
Taiwan | 1.0% |
Others (Individually Less Than 1%) | 0.9% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Tech Hardware Portfolio
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $13,025,475) — See accompanying schedule: Unaffiliated issuers (cost $646,070,041) | $904,857,334 | |
Fidelity Central Funds (cost $15,304,190) | 15,304,190 | |
Total Investment in Securities (cost $661,374,231) | $920,161,524 | |
Foreign currency held at value (cost $9) | 9 | |
Receivable for investments sold | 31,832,281 | |
Receivable for fund shares sold | 334,062 | |
Dividends receivable | 902,310 | |
Distributions receivable from Fidelity Central Funds | 683 | |
Prepaid expenses | 2,524 | |
Other receivables | 282,917 | |
Total assets | 953,516,310 | |
Liabilities | ||
Payable for investments purchased | $25,227,030 | |
Payable for fund shares redeemed | 833,415 | |
Accrued management fee | 408,909 | |
Other affiliated payables | 138,741 | |
Other payables and accrued expenses | 118,462 | |
Collateral on securities loaned | 13,140,825 | |
Total liabilities | 39,867,382 | |
Net Assets | $913,648,928 | |
Net Assets consist of: | ||
Paid in capital | $549,045,094 | |
Total accumulated earnings (loss) | 364,603,834 | |
Net Assets | $913,648,928 | |
Net Asset Value, offering price and redemption price per share ($913,648,928 ÷ 9,003,210 shares) | $101.48 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $9,260,938 | |
Income from Fidelity Central Funds (including $31,779 from security lending) | 38,818 | |
Total income | 9,299,756 | |
Expenses | ||
Management fee | $4,434,928 | |
Transfer agent fees | 1,168,257 | |
Accounting fees | 289,471 | |
Custodian fees and expenses | 69,731 | |
Independent trustees' fees and expenses | 3,060 | |
Registration fees | 38,582 | |
Audit | 47,661 | |
Legal | 12,691 | |
Interest | 1,002 | |
Miscellaneous | 30,539 | |
Total expenses before reductions | 6,095,922 | |
Expense reductions | (19,756) | |
Total expenses after reductions | 6,076,166 | |
Net investment income (loss) | 3,223,590 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 174,108,154 | |
Foreign currency transactions | (164,287) | |
Total net realized gain (loss) | 173,943,867 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | (149,818,667) | |
Assets and liabilities in foreign currencies | 83,019 | |
Total change in net unrealized appreciation (depreciation) | (149,735,648) | |
Net gain (loss) | 24,208,219 | |
Net increase (decrease) in net assets resulting from operations | $27,431,809 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $3,223,590 | $6,103,803 |
Net realized gain (loss) | 173,943,867 | 94,734,806 |
Change in net unrealized appreciation (depreciation) | (149,735,648) | 193,184,672 |
Net increase (decrease) in net assets resulting from operations | 27,431,809 | 294,023,281 |
Distributions to shareholders | (131,911,413) | (61,816,773) |
Share transactions | ||
Proceeds from sales of shares | 125,851,574 | 88,420,400 |
Net asset value of shares issued in exchange for the net assets of the Target Fund(s) (see Merger information note) | 189,381,924 | – |
Reinvestment of distributions | 125,862,871 | 59,014,619 |
Cost of shares redeemed | (193,743,884) | (142,658,039) |
Net increase (decrease) in net assets resulting from share transactions | 247,352,485 | 4,776,980 |
Total increase (decrease) in net assets | 142,872,881 | 236,983,488 |
Net Assets | ||
Beginning of period | 770,776,047 | 533,792,559 |
End of period | $913,648,928 | $770,776,047 |
Other Information | ||
Shares | ||
Sold | 1,206,665 | 905,980 |
Issued in exchange for the shares of the Target Fund(s) (see Merger Information note) | 1,755,160 | – |
Issued in reinvestment of distributions | 1,142,875 | 681,911 |
Redeemed | (1,819,249) | (1,658,159) |
Net increase (decrease) | 2,285,451 | (70,268) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Tech Hardware Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $114.74 | $78.64 | $75.84 | $92.81 | $83.01 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .42 | .93D | 1.51E | .81 | .67 |
Net realized and unrealized gain (loss) | 5.73 | 44.83 | 11.48 | (1.67) | 19.24 |
Total from investment operations | 6.15 | 45.76 | 12.99 | (.86) | 19.91 |
Distributions from net investment income | (.73)F | (1.61) | (.77) | (.88)F | (.73)F |
Distributions from net realized gain | (18.68)F | (8.05) | (9.42) | (15.23)F | (9.38)F |
Total distributions | (19.41) | (9.66) | (10.19) | (16.11) | (10.11) |
Redemption fees added to paid in capital | – | – | – | – | –G |
Net asset value, end of period | $101.48 | $114.74 | $78.64 | $75.84 | $92.81 |
Total ReturnH | 4.72% | 62.60% | 17.80% | .54% | 24.82% |
Ratios to Average Net AssetsC,I,J | |||||
Expenses before reductions | .72%K | .74% | .76% | .77% | .79% |
Expenses net of fee waivers, if any | .72%K | .74% | .76% | .77% | .79% |
Expenses net of all reductions | .72%K | .73% | .75% | .77% | .78% |
Net investment income (loss) | .38%K | 1.04%D | 1.95%E | .90% | .75% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $913,649 | $770,776 | $533,793 | $491,780 | $538,332 |
Portfolio turnover rateL | 99%M | 78% | 116% | 81% | 57% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.44 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .55%.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.78 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .94%.
F The amounts shown reflect certain reclassifications related to book to tax differences that were made in the year shown.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
K Proxy expenses are not annualized.
L Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
M The portfolio turnover rate does not include the assets acquired in the merger.
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Technology Portfolio | 1.91% | 25.60% | 19.96% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Technology Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789797248_740.jpg)
Period Ending Values | ||
$61,715 | Technology Portfolio | |
$39,037 | S&P 500® Index |
Technology Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Adam Benjamin: For the fiscal year ending February 28, 2022, the fund gained 1.91%, considerably underperforming the 14.23% gain of the MSCI U.S. IMI Information Technology 25/50 Index, as well as the broad-based S&P 500® index. Versus the sector index, out-of-index exposure to the electrical components & equipment category was the largest detractor. Stock selection in application software and non-index positioning in internet & direct marketing retail also hindered the fund's relative result. Our non-index stake in Sunrun was the fund's biggest individual relative detractor, due to its roughly -63% result. The fund did not own Sunrun at period end. The fund's non-index stake in Array Technologies, a position not held at period end, returned roughly -74%. Another notable relative detractor was an outsized stake in Yext (-55%). This period we reduced our stake. Conversely, the top contributor to performance versus the sector index was our security selection in semiconductors. An underweighting in electronic equipment & instruments and stock selection in systems software also boosted the fund's relative performance. The fund's biggest individual relative contributor was our lighter-than-index stake in Intel, which returned about -19% the past year. Intel was not held at period end. Also bolstering performance was our overweighting in On Semiconductor, which gained 55%. We decreased our position the past 12 months. Another notable relative contributor was an outsized stake in Jabil (+36%). This period we reduced our stake. Notable changes in positioning include a higher allocation to the technology hardware, storage & peripherals and semiconductors subindustries.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: After more than 17 years of service, Brian Lempel retired from Fidelity on January 18, 2022, at which time Adam Benjamin assumed sole management responsibilities for the fund.Technology Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
Apple, Inc. | 24.4 |
Microsoft Corp. | 19.0 |
NVIDIA Corp. | 6.5 |
Marvell Technology, Inc. | 4.4 |
Cisco Systems, Inc. | 4.3 |
MasterCard, Inc. Class A | 3.5 |
Salesforce.com, Inc. | 3.5 |
NXP Semiconductors NV | 2.9 |
Twilio, Inc. Class A | 1.9 |
onsemi | 1.8 |
72.2 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Software | 30.8% | |
Technology Hardware, Storage & Peripherals | 24.6% | |
Semiconductors & Semiconductor Equipment | 21.5% | |
IT Services | 10.9% | |
Communications Equipment | 4.5% | |
All Others* | 7.7% |
* Includes short-term investments and net other assets (liabilities).
Technology Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 98.6% | |||
Shares | Value | ||
Capital Markets - 0.0% | |||
Financial Exchanges & Data - 0.0% | |||
Coinbase Global, Inc. (a) | 8,511 | $1,623,643 | |
Chemicals - 0.2% | |||
Commodity Chemicals - 0.2% | |||
LG Chemical Ltd. | 40,787 | 19,357,259 | |
Communications Equipment - 4.3% | |||
Communications Equipment - 4.3% | |||
Cisco Systems, Inc. | 8,584,573 | 478,761,636 | |
Diversified Financial Services - 0.1% | |||
Other Diversified Financial Services - 0.1% | |||
Ant International Co. Ltd. Class C (a)(b)(c) | 6,426,931 | 12,339,708 | |
Electrical Equipment - 0.0% | |||
Electrical Components & Equipment - 0.0% | |||
ESS Tech, Inc. Class A (a) | 787,286 | 4,086,014 | |
Electronic Equipment & Components - 0.7% | |||
Electronic Manufacturing Services - 0.7% | |||
Jabil, Inc. | 1,236,625 | 71,489,291 | |
Entertainment - 0.8% | |||
Movies & Entertainment - 0.8% | |||
Netflix, Inc. (a) | 226,730 | 89,449,520 | |
Food Products - 0.1% | |||
Agricultural Products - 0.1% | |||
Local Bounti Corp. (a) | 1,546,921 | 9,250,588 | |
Hotels, Restaurants & Leisure - 1.1% | |||
Hotels, Resorts & Cruise Lines - 1.1% | |||
Airbnb, Inc. Class A (a) | 769,909 | 116,633,514 | |
Interactive Media & Services - 1.6% | |||
Interactive Media & Services - 1.6% | |||
Snap, Inc. Class A (a) | 3,090,113 | 123,419,113 | |
Tongdao Liepin Group (a) | 23,893,133 | 57,480,984 | |
180,900,097 | |||
Internet & Direct Marketing Retail - 0.2% | |||
Internet & Direct Marketing Retail - 0.2% | |||
Cazoo Group Ltd. (c) | 144,100 | 508,673 | |
Deliveroo PLC Class A (a)(d) | 6,252,898 | 10,672,077 | |
Grab Holdings Ltd. (c) | 1,604,100 | 9,239,616 | |
20,420,366 | |||
IT Services - 10.6% | |||
Data Processing & Outsourced Services - 7.2% | |||
Genpact Ltd. | 1,691,376 | 70,767,172 | |
MasterCard, Inc. Class A | 1,076,680 | 388,487,678 | |
PayPal Holdings, Inc. (a) | 1,475,005 | 165,097,310 | |
Visa, Inc. Class A (e) | 794,787 | 171,769,366 | |
796,121,526 | |||
Internet Services & Infrastructure - 2.6% | |||
Okta, Inc. (a) | 207,535 | 37,945,699 | |
Shopify, Inc. Class A (a)(e) | 62,850 | 43,634,241 | |
Twilio, Inc. Class A (a) | 1,185,365 | 207,201,802 | |
288,781,742 | |||
IT Consulting & Other Services - 0.8% | |||
Cognizant Technology Solutions Corp. Class A | 639,000 | 55,037,070 | |
Thoughtworks Holding, Inc. | 1,329,903 | 28,881,503 | |
83,918,573 | |||
TOTAL IT SERVICES | 1,168,821,841 | ||
Life Sciences Tools & Services - 0.0% | |||
Life Sciences Tools & Services - 0.0% | |||
Eden Biologics, Inc. (a)(b) | 1,015,442 | 0 | |
Oil, Gas & Consumable Fuels - 0.9% | |||
Oil & Gas Refining & Marketing - 0.9% | |||
Reliance Industries Ltd. | 2,989,007 | 93,388,040 | |
Reliance Industries Ltd. sponsored GDR (d) | 79,100 | 4,964,981 | |
98,353,021 | |||
Pharmaceuticals - 0.0% | |||
Pharmaceuticals - 0.0% | |||
Chime Biologics Ltd. (a)(b) | 1,015,442 | 528,873 | |
Professional Services - 0.0% | |||
Research & Consulting Services - 0.0% | |||
Otonomo Technologies Ltd. (a) | 1,048,000 | 1,509,120 | |
Road & Rail - 1.3% | |||
Trucking - 1.3% | |||
Lyft, Inc. (a) | 1,718,528 | 66,919,480 | |
Uber Technologies, Inc. (a) | 2,254,238 | 81,220,195 | |
148,139,675 | |||
Semiconductors & Semiconductor Equipment - 21.5% | |||
Semiconductor Equipment - 1.9% | |||
ASML Holding NV (Netherlands) | 104,750 | 70,080,273 | |
Teradyne, Inc. | 1,198,728 | 141,354,006 | |
211,434,279 | |||
Semiconductors - 19.6% | |||
Advanced Micro Devices, Inc. (a) | 447,394 | 55,181,576 | |
GlobalFoundries, Inc. | 2,884,574 | 175,324,408 | |
Marvell Technology, Inc. | 7,169,481 | 489,890,637 | |
Microchip Technology, Inc. | 1,808,240 | 127,173,519 | |
NVIDIA Corp. | 2,958,469 | 721,422,666 | |
NXP Semiconductors NV | 1,681,018 | 319,595,142 | |
onsemi (a) | 3,248,547 | 203,391,528 | |
Renesas Electronics Corp. (a) | 1 | 12 | |
Semtech Corp. (a) | 97,229 | 6,745,748 | |
Taiwan Semiconductor Manufacturing Co. Ltd. | 3,142,488 | 67,583,800 | |
2,166,309,036 | |||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 2,377,743,315 | ||
Software - 30.5% | |||
Application Software - 9.6% | |||
Adobe, Inc. (a) | 198,476 | 92,823,256 | |
CCC Intelligent Solutions Holdings, Inc. (c) | 102,045 | 1,108,209 | |
Confluent, Inc. | 26,842 | 1,148,569 | |
Cvent Holding Corp. (c) | 1,099,667 | 8,852,319 | |
Epic Games, Inc. (a)(b)(c) | 17,917 | 13,187,270 | |
Intuit, Inc. | 378,813 | 179,697,523 | |
Nutanix, Inc. Class B (a)(d) | 72,872 | 1,945,682 | |
Procore Technologies, Inc. (a)(e) | 10,475 | 682,865 | |
Qualtrics International, Inc. | 1,459,293 | 44,260,357 | |
Rimini Street, Inc. (a)(e) | 358,009 | 1,621,781 | |
Salesforce.com, Inc. (a) | 1,808,452 | 380,733,400 | |
Stripe, Inc. Class B (a)(b)(c) | 38,600 | 1,242,920 | |
Workday, Inc. Class A (a)(e) | 692,526 | 158,623,080 | |
Yext, Inc. (a) | 1,315,204 | 9,758,814 | |
Zoom Video Communications, Inc. Class A (a) | 1,274,672 | 169,021,507 | |
1,064,707,552 | |||
Systems Software - 20.9% | |||
GitLab, Inc. (e) | 9,820 | 572,211 | |
Microsoft Corp. | 7,035,286 | 2,102,073,104 | |
Palo Alto Networks, Inc. (a) | 114,300 | 67,922,775 | |
Rapid7, Inc. (a) | 682,836 | 70,646,213 | |
Tenable Holdings, Inc. (a) | 1,190,872 | 65,926,674 | |
UiPath, Inc. Class A (a)(e) | 88,382 | 3,067,739 | |
2,310,208,716 | |||
TOTAL SOFTWARE | 3,374,916,268 | ||
Technology Hardware, Storage & Peripherals - 24.6% | |||
Technology Hardware, Storage & Peripherals - 24.6% | |||
Apple, Inc. | 16,322,550 | 2,695,179,456 | |
IonQ, Inc. (c) | 8,400 | 134,232 | |
Samsung Electronics Co. Ltd. | 376,717 | 22,700,840 | |
2,718,014,528 | |||
Textiles, Apparel & Luxury Goods - 0.0% | |||
Textiles - 0.0% | |||
Algolia, Inc. (b)(c) | 153,503 | 4,489,203 | |
Transportation Infrastructure - 0.1% | |||
Highways & Railtracks - 0.1% | |||
Delhivery Private Ltd. (b)(c) | 579,000 | 4,502,324 | |
TOTAL COMMON STOCKS | |||
(Cost $7,573,506,739) | 10,901,329,804 | ||
Preferred Stocks - 1.1% | |||
Convertible Preferred Stocks - 0.9% | |||
Aerospace & Defense - 0.1% | |||
Aerospace & Defense - 0.1% | |||
ABL Space Systems: | |||
Series B (b)(c) | 98,000 | 6,663,618 | |
Series B2 (b)(c) | 74,989 | 5,098,960 | |
11,762,578 | |||
Communications Equipment - 0.2% | |||
Communications Equipment - 0.2% | |||
Astranis Space Technologies Corp. Series C (b)(c) | 605,440 | 18,030,003 | |
Xsight Labs Ltd. Series D (b)(c) | 281,500 | 2,809,370 | |
20,839,373 | |||
Construction & Engineering - 0.0% | |||
Construction & Engineering - 0.0% | |||
Beta Technologies, Inc. Series A (b)(c) | 72,591 | 5,318,743 | |
Hotels, Restaurants & Leisure - 0.0% | |||
Casinos & Gaming - 0.0% | |||
Discord, Inc. Series I (b)(c) | 1,300 | 715,812 | |
Interactive Media & Services - 0.2% | |||
Interactive Media & Services - 0.2% | |||
Reddit, Inc.: | |||
Series D (a)(b)(c) | 250,861 | 15,501,805 | |
Series E (b)(c) | 14,400 | 889,839 | |
16,391,644 | |||
IT Services - 0.1% | |||
Internet Services & Infrastructure - 0.1% | |||
ByteDance Ltd. Series E1 (a)(b)(c) | 70,707 | 11,142,009 | |
Road & Rail - 0.0% | |||
Trucking - 0.0% | |||
Convoy, Inc. Series D (a)(b)(c) | 203,844 | 3,362,998 | |
Semiconductors & Semiconductor Equipment - 0.0% | |||
Semiconductor Equipment - 0.0% | |||
Astera Labs, Inc. Series C (b)(c) | 344,200 | 1,390,568 | |
Semiconductors - 0.0% | |||
GaN Systems, Inc.: | |||
Series F1 (b)(c) | 133,634 | 1,133,216 | |
Series F2 (b)(c) | 70,564 | 598,383 | |
1,731,599 | |||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 3,122,167 | ||
Software - 0.3% | |||
Application Software - 0.3% | |||
Bolt Technology OU Series E (b)(c) | 40,842 | 10,532,641 | |
Databricks, Inc.: | |||
Series G (b)(c) | 15,004 | 3,307,668 | |
Series H (b)(c) | 58,006 | 12,787,562 | |
Skyryse, Inc. Series B (b)(c) | 121,800 | 3,006,020 | |
Stripe, Inc. Series H (b)(c) | 17,100 | 550,620 | |
30,184,511 | |||
Textiles, Apparel & Luxury Goods - 0.0% | |||
Textiles - 0.0% | |||
Algolia SAS Series D (b)(c) | 109,867 | 3,213,066 | |
TOTAL CONVERTIBLE PREFERRED STOCKS | 106,052,901 | ||
Nonconvertible Preferred Stocks - 0.2% | |||
IT Services - 0.2% | |||
Data Processing & Outsourced Services - 0.1% | |||
Checkr, Inc. Series E (b) | 237,000 | 12,798,000 | |
Internet Services & Infrastructure - 0.1% | |||
Gupshup, Inc. (b)(c) | 257,284 | 5,153,399 | |
TOTAL IT SERVICES | 17,951,399 | ||
TOTAL PREFERRED STOCKS | |||
(Cost $102,163,475) | 124,004,300 | ||
Preferred Securities - 0.0% | |||
Semiconductors & Semiconductor Equipment - 0.0% | |||
Semiconductors - 0.0% | |||
GaN Systems, Inc. 0% (b)(c)(f) | |||
(Cost $3,132,190) | 3,132,190 | 3,132,190 | |
Money Market Funds - 1.6% | |||
Fidelity Cash Central Fund 0.07% (g) | 49,623,959 | 49,633,884 | |
Fidelity Securities Lending Cash Central Fund 0.07% (g)(h) | 122,529,700 | 122,541,953 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $172,175,837) | 172,175,837 | ||
TOTAL INVESTMENT IN SECURITIES - 101.3% | |||
(Cost $7,850,978,241) | 11,200,642,131 | ||
NET OTHER ASSETS (LIABILITIES) - (1.3)% | (146,853,737) | ||
NET ASSETS - 100% | $11,053,788,394 |
Legend
(a) Non-income producing
(b) Level 3 security
(c) Restricted securities (including private placements) - 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 $169,942,964 or 1.5% of net assets.
(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 $17,582,740 or 0.2% of net assets.
(e) Security or a portion of the security is on loan at period end.
(f) Security is perpetual in nature with no stated maturity date.
(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 |
ABL Space Systems Series B | 3/24/21 | $4,413,489 |
ABL Space Systems Series B2 | 10/22/21 | $5,098,960 |
Algolia SAS Series D | 7/23/21 | $3,213,066 |
Algolia, Inc. | 10/27/21 | $4,489,203 |
Ant International Co. Ltd. Class C | 5/16/18 | $24,495,442 |
Astera Labs, Inc. Series C | 8/24/21 | $1,157,132 |
Astranis Space Technologies Corp. Series C | 3/19/21 | $13,271,808 |
Beta Technologies, Inc. Series A | 4/9/21 | $5,318,743 |
Bolt Technology OU Series E | 1/3/22 | $10,610,609 |
ByteDance Ltd. Series E1 | 11/18/20 | $7,747,662 |
Cazoo Group Ltd. | 3/28/21 | $1,441,000 |
CCC Intelligent Solutions Holdings, Inc. | 2/2/21 | $1,020,450 |
Convoy, Inc. Series D | 10/30/19 | $2,760,048 |
Cvent Holding Corp. | 7/23/21 | $10,996,670 |
Databricks, Inc. Series G | 2/1/21 | $2,661,228 |
Databricks, Inc. Series H | 8/31/21 | $12,787,562 |
Delhivery Private Ltd. | 5/20/21 | $2,826,237 |
Discord, Inc. Series I | 9/15/21 | $715,812 |
Epic Games, Inc. | 3/29/21 | $15,856,545 |
GaN Systems, Inc. Series F1 | 11/30/21 | $1,133,216 |
GaN Systems, Inc. Series F2 | 11/30/21 | $598,383 |
GaN Systems, Inc. 0% | 11/30/21 | $3,132,190 |
Grab Holdings Ltd. | 4/12/21 | $16,041,000 |
Gupshup, Inc. | 6/8/21 | $5,882,850 |
IonQ, Inc. | 3/7/21 | $84,000 |
Reddit, Inc. Series D | 2/4/19 | $5,440,247 |
Reddit, Inc. Series E | 5/18/21 | $611,628 |
Skyryse, Inc. Series B | 10/21/21 | $3,006,020 |
Stripe, Inc. Class B | 5/18/21 | $1,548,955 |
Stripe, Inc. Series H | 3/15/21 | $686,138 |
Xsight Labs Ltd. Series D | 2/16/21 | $2,250,874 |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $238,396 | $1,573,717,424 | $1,524,321,936 | $14,822 | $-- | $-- | $49,633,884 | 0.1% |
Fidelity Securities Lending Cash Central Fund 0.07% | 92,023,760 | 2,416,581,780 | 2,386,063,587 | 576,673 | -- | -- | 122,541,953 | 0.3% |
Total | $92,262,156 | $3,990,299,204 | $3,910,385,523 | $591,495 | $-- | $-- | $172,175,837 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
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 | Realized Gain (loss) | Change in Unrealized appreciation (depreciation) | Value, end of period |
Momentive Global, Inc. | $169,018,078 | $2,220,723 | $166,939,883 | $-- | $(49,387,850) | $45,088,932 | $-- |
Yext, Inc. | 127,999,800 | 3,247,451 | 62,553,025 | -- | (50,806,994) | (8,128,418) | -- |
Total | $297,017,878 | $5,468,174 | $229,492,908 | $-- | $(100,194,844) | $36,960,514 | $-- |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $10,901,329,804 | $10,640,798,761 | $224,240,745 | $36,290,298 |
Preferred Stocks | 124,004,300 | -- | -- | 124,004,300 |
Preferred Securities | 3,132,190 | -- | -- | 3,132,190 |
Money Market Funds | 172,175,837 | 172,175,837 | -- | -- |
Total Investments in Securities: | $11,200,642,131 | $10,812,974,598 | $224,240,745 | $163,426,788 |
The following is a reconciliation of Investments in Securities for which Level 3 inputs were used in determining value:
Investments in Securities: | |
Preferred Stocks | |
Beginning Balance | $84,688,050 |
Total Realized Gain (Loss) | -- |
Total Unrealized Gain (Loss) | 16,122,460 |
Cost of Purchases | 81,303,414 |
Proceeds of Sales | -- |
Amortization/Accretion | -- |
Transfers in to Level 3 | -- |
Transfers out of Level 3 | (58,109,624) |
Ending Balance | $124,004,300 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2022 | $16,122,460 |
Other Investments in Securities | |
Beginning Balance | $24,020,046 |
Total Realized Gain (Loss) | -- |
Total Unrealized Gain (Loss) | (12,450,688) |
Cost of Purchases | 27,853,130 |
Proceeds of Sales | -- |
Amortization/Accretion | -- |
Transfers in to Level 3 | -- |
Transfers out of Level 3 | -- |
Ending Balance | $39,422,488 |
The change in unrealized gain (loss) for the period attributable to Level 3 securities held at February 28, 2022 | $(12,450,688) |
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. Cost of purchases and proceeds of sales may include securities received and/or delivered through in-kind transactions. 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 reconciliation 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.
Technology Portfolio
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $118,874,782) — See accompanying schedule: Unaffiliated issuers (cost $7,678,802,404) | $11,028,466,294 | |
Fidelity Central Funds (cost $172,175,837) | 172,175,837 | |
Total Investment in Securities (cost $7,850,978,241) | $11,200,642,131 | |
Receivable for investments sold | 7,055,538 | |
Receivable for fund shares sold | 9,340,423 | |
Dividends receivable | 5,712,730 | |
Distributions receivable from Fidelity Central Funds | 8,933 | |
Prepaid expenses | 34,764 | |
Other receivables | 604,817 | |
Total assets | 11,223,399,336 | |
Liabilities | ||
Payable to custodian bank | $33,538 | |
Payable for investments purchased | 29,206,718 | |
Payable for fund shares redeemed | 10,558,236 | |
Accrued management fee | 4,940,481 | |
Other affiliated payables | 1,437,074 | |
Other payables and accrued expenses | 908,134 | |
Collateral on securities loaned | 122,526,761 | |
Total liabilities | 169,610,942 | |
Net Assets | $11,053,788,394 | |
Net Assets consist of: | ||
Paid in capital | $7,699,494,599 | |
Total accumulated earnings (loss) | 3,354,293,795 | |
Net Assets | $11,053,788,394 | |
Net Asset Value, offering price and redemption price per share ($11,053,788,394 ÷ 443,537,179 shares) | $24.92 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $54,061,786 | |
Income from Fidelity Central Funds (including $576,673 from security lending) | 591,495 | |
Total income | 54,653,281 | |
Expenses | ||
Management fee | $64,610,978 | |
Transfer agent fees | 16,259,118 | |
Accounting fees | 1,380,913 | |
Custodian fees and expenses | 226,800 | |
Independent trustees' fees and expenses | 44,640 | |
Registration fees | 276,204 | |
Audit | 50,433 | |
Legal | 17,113 | |
Interest | 46,763 | |
Miscellaneous | 60,392 | |
Total expenses before reductions | 82,973,354 | |
Expense reductions | (285,724) | |
Total expenses after reductions | 82,687,630 | |
Net investment income (loss) | (28,034,349) | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of foreign taxes of $10,488,653) | 1,044,539,977 | |
Affiliated issuers | (100,194,844) | |
Foreign currency transactions | (1,415,062) | |
Total net realized gain (loss) | 942,930,071 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of decrease in deferred foreign taxes of $7,266,298) | (704,033,845) | |
Affiliated issuers | 36,960,514 | |
Unfunded commitments | (7,366,272) | |
Assets and liabilities in foreign currencies | (12,111) | |
Total change in net unrealized appreciation (depreciation) | (674,451,714) | |
Net gain (loss) | 268,478,357 | |
Net increase (decrease) in net assets resulting from operations | $240,444,008 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $(28,034,349) | $(12,445,183) |
Net realized gain (loss) | 942,930,071 | 2,513,889,332 |
Change in net unrealized appreciation (depreciation) | (674,451,714) | 2,247,949,257 |
Net increase (decrease) in net assets resulting from operations | 240,444,008 | 4,749,393,406 |
Distributions to shareholders | (1,453,950,149) | (1,867,597,939) |
Share transactions | ||
Proceeds from sales of shares | 2,156,919,710 | 4,191,878,143 |
Reinvestment of distributions | 1,378,760,437 | 1,777,095,512 |
Cost of shares redeemed | (3,254,727,729) | (3,423,005,308) |
Net increase (decrease) in net assets resulting from share transactions | 280,952,418 | 2,545,968,347 |
Total increase (decrease) in net assets | (932,553,723) | 5,427,763,814 |
Net Assets | ||
Beginning of period | 11,986,342,117 | 6,558,578,303 |
End of period | $11,053,788,394 | $11,986,342,117 |
Other Information | ||
Shares | ||
Sold | 76,869,741 | 172,897,974 |
Issued in reinvestment of distributions | 49,764,669 | 71,641,712 |
Redeemed | (118,513,597) | (142,814,110) |
Net increase (decrease) | 8,120,813 | 101,725,576 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Technology Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B | 2018 B |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $27.53 | $19.65 | $15.45 | $19.36 | $14.70 |
Income from Investment Operations | |||||
Net investment income (loss)C,D | (.06) | (.03) | .05 | .06 | – |
Net realized and unrealized gain (loss) | .83 | 12.98 | 4.52 | (.78) | 6.15 |
Total from investment operations | .77 | 12.95 | 4.57 | (.72) | 6.15 |
Distributions from net investment income | – | (.03) | (.05) | (.02) | – |
Distributions from net realized gain | (3.38) | (5.04) | (.32) | (3.17) | (1.49) |
Total distributions | (3.38) | (5.07) | (.37) | (3.19) | (1.49) |
Net asset value, end of period | $24.92 | $27.53 | $19.65 | $15.45 | $19.36 |
Total ReturnE | 1.91% | 69.87% | 29.57% | (3.03)% | 43.71% |
Ratios to Average Net AssetsD,F,G | |||||
Expenses before reductions | .67% | .69% | .71% | .72% | .75% |
Expenses net of fee waivers, if any | .67% | .69% | .71% | .72% | .75% |
Expenses net of all reductions | .67% | .68% | .71% | .71% | .74% |
Net investment income (loss) | (.23)% | (.13)% | .30% | .34% | .01% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $11,053,788 | $11,986,342 | $6,558,578 | $5,124,121 | $7,242,300 |
Portfolio turnover rateH | 87% | 107% | 32%I | 126%I | 71% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on August 10, 2018.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
H Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
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, 2022
1. Organization.
IT Services Portfolio, Semiconductors Portfolio, Software and IT Services Portfolio, Tech Hardware Portfolio (formerly Computers 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.
Funds may 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
Based on its investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the investing fund. These strategies are consistent with the investment objectives of the investing fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the investing fund.
Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio(a) |
Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | Less than .005% |
(a) Expenses expressed as a percentage of average net assets and are as of each underlying Central Fund's most recent annual or semi-annual shareholder report.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which contain the significant accounting policies (including investment valuation policies) of those funds, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission website or upon request.
3. Significant Accounting Policies.
Each Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies. 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. Each Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. The following summarizes the significant accounting policies of each 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 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 – Unadjusted 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. 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. Securities, including private placements or other restricted securities, for which observable inputs are not available are valued using alternate valuation approaches, including the market approach, the income approach and cost approach, and are categorized as Level 3 in the hierarchy. The market approach considers factors including the price of recent investments in the same or a similar security or financial metrics of comparable securities. The income approach considers factors including expected future cash flows, security specific risks and corresponding discount rates. The cost approach considers factors including the value of the security's underlying assets and liabilities.
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. Preferred securities 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.
The following provides information on Level 3 securities held by the 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 | $ 160,294,598 | Market comparable | Price/Earnings multiple (P/E) | 7.6 | Increase |
Discount for lack of marketability | 15.0% | Decrease | |||
Enterprise value/Revenue multiple (EV/S) | 4.0 - 5.0 / 4.5 | Increase | |||
Recovery value | Recovery value | 0.0% | Increase | ||
Market approach | Transaction price | $3.36 - $550.62 / $101.79 | Increase | ||
Discount rate | 75.0% | Decrease | |||
Discount for lack of marketability | 10.0% | Decrease | |||
Premium rate | 20.2% - 24.8% / 23.3% | Increase | |||
Discounted cash flow | Weighted average cost of capital (WACC) | 19.6% | Decrease | ||
Discount for lack of marketability | 10.0% | Decrease | |||
Growth rate | 2.0% | Increase | |||
Preferred Securities | $ 3,132,190 | Market approach | Transaction price | $100.00 | Increase |
(a) Represents the directional change in the fair value of the Level 3 investments that could have resulted from an increase in the corresponding input as of period end. A decrease to the unobservable input would have had the opposite effect. Significant changes in these inputs may have resulted in a significantly higher or lower fair value measurement at period end.
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, 2022, as well as a roll forward of Level 3 investments, is included at the end of each Fund's Schedule of Investments.
Foreign Currency. Certain 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 for certain Funds include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable.
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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. 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 certain Funds, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in affiliated mutual funds, are marked-to-market and remain in a fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees presented below are included in the accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, as applicable.
Semiconductors Portfolio | $221,431 |
Software and IT Services Portfolio | 379,088 |
Tech Hardware Portfolio | 61,417 |
Technology Portfolio | 361,821 |
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, 2022, 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. These differences resulted in distribution reclassifications. 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, passive foreign investment companies (PFIC), deferred Trustee compensation, net operating losses and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows for each Fund:
Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) | |
IT Services Portfolio | $1,726,788,259 | $1,420,816,224 | $(182,626,837) | $1,238,189,387 |
Semiconductors Portfolio | 5,201,543,375 | 3,536,591,900 | (208,548,290) | 3,328,043,610 |
Software and IT Services Portfolio | 5,644,855,582 | 6,059,131,683 | (492,163,060) | 5,566,968,623 |
Tech Hardware Portfolio | 663,901,790 | 294,209,140 | (37,949,406) | 256,259,734 |
Technology Portfolio | 7,853,928,828 | 3,877,810,642 | (531,097,339) | 3,346,713,303 |
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 | |
IT Services Portfolio | $– | $302,045,968 | $– | $1,238,179,456 |
Semiconductors Portfolio | – | 287,079,440 | – | 3,328,040,260 |
Software and IT Services Portfolio | – | 392,556,811 | – | 5,566,875,555 |
Tech Hardware Portfolio | 16,085,481 | 92,385,162 | – | 256,190,622 |
Technology Portfolio | – | 309,758,325 | – | 3,346,710,149 |
Certain of the Funds intend to elect to defer to the next fiscal year capital losses recognized during the period November 1, 2021 to February 28, 2022, and ordinary losses recognized during the period January 1, 2022 to February 28, 2022. Loss deferrals were as follows:
Ordinary losses | Capital losses | |||||
IT Services Portfolio | $– | $(5,864,158) | ||||
Semiconductors Portfolio | (2,480,569) | (12,926,652) | ||||
Technology Portfolio | – | (301,751,401) |
The tax character of distributions paid was as follows:
February 28, 2022 | |||
Ordinary Income | Long-term Capital Gains | Total | |
IT Services Portfolio | $89,426,516 | $439,120,500 | $528,547,016 |
Semiconductors Portfolio | 136,166,549 | 477,772,748 | 613,939,297 |
Software and IT Services Portfolio | 148,809,597 | 683,045,141 | 831,854,738 |
Tech Hardware Portfolio | 37,057,085 | 94,854,328 | 131,911,413 |
Technology Portfolio | 859,319,443 | 594,630,706 | 1,453,950,149 |
February 28, 2021 | |||
Ordinary Income | Long-term Capital Gains | Total | |
IT Services Portfolio | $314,862 | $222,849,473 | $223,164,335 |
Semiconductors Portfolio | 157,741,609 | 252,815,233 | 410,556,842 |
Software and IT Services Portfolio | 251,374,950 | 331,195,503 | 582,570,453 |
Tech Hardware Portfolio | 21,063,099 | 40,753,674 | 61,816,773 |
Technology Portfolio | 236,650,457 | 1,630,947,482 | 1,867,597,939 |
Restricted Securities (including Private Placements). 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 held at period end is included at the end of the Schedule of Investments, if applicable.
Special Purpose Acquisition Companies. Funds may invest in stock, warrants, and other securities of special purpose acquisition companies (SPACs) or similar special purpose entities. A SPAC is a publicly traded company that raises investment capital via an initial public offering (IPO) for the purpose of acquiring the equity securities of one or more existing companies via merger, business combination, acquisition or other similar transactions within a designated time frame.
Private Investment in Public Equity. Funds may acquire equity securities of an issuer through a private investment in a public equity (PIPE) transaction, including through commitments to purchase securities on a when-issued basis. A PIPE typically involves the purchase of securities directly from a publicly traded company in a private placement transaction. Securities purchased through PIPE transactions will be restricted from trading and considered illiquid until a resale registration statement for the shares is filed and declared effective.
At the current and/or prior period end, IT Services Portfolio and Technology Portfolio had commitments to purchase when-issued securities through PIPE transactions with SPACs. The commitments are contingent upon the SPACs acquiring the securities of target companies. Unrealized appreciation (depreciation) on any commitments outstanding at period end is separately presented in the Statements of Assets and Liabilities as Unrealized appreciation (depreciation) on unfunded commitments, and any change in unrealized appreciation (depreciation) on unfunded commitments during the period is separately presented in the Statement of Operations, as applicable.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, securities acquired in the merger and in-kind transactions, as applicable, are noted in the table below.
Purchases ($) | Sales ($) | |
IT Services Portfolio | 1,595,595,040 | 2,417,079,599 |
Semiconductors Portfolio | 3,778,213,426 | 2,402,372,244 |
Software and IT Services Portfolio | 1,229,169,780 | 1,691,286,552 |
Tech Hardware Portfolio | 813,196,852 | 870,477,862 |
Technology Portfolio | 10,670,725,588 | 11,927,697,511 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company 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 monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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 | |
IT Services Portfolio | .30% | .22% | .52% |
Semiconductors Portfolio | .30% | .22% | .53% |
Software and IT Services Portfolio | .30% | .22% | .52% |
Tech Hardware Portfolio | .30% | .22% | .53% |
Technology Portfolio | .30% | .22% | .52% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (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:
IT Services Portfolio | .14% |
Semiconductors Portfolio | .13% |
Software and IT Services Portfolio | .13% |
Tech Hardware Portfolio | .14% |
Technology Portfolio | .13% |
Accounting 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. For the period, the fees were equivalent to the following annual rates:
% of Average Net Assets | |
IT Services Portfolio | .03 |
Semiconductors Portfolio | .02 |
Software and IT Services Portfolio | .01 |
Tech Hardware Portfolio | .03 |
Technology Portfolio | .01 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 | |
IT Services Portfolio | $31,232 |
Semiconductors Portfolio | 54,525 |
Software and IT Services Portfolio | 11,479 |
Tech Hardware Portfolio | 18,651 |
Technology Portfolio | 229,626 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), each Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing each Fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. 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 | $8,128,305 | .31% | $7,266 |
Semiconductors Portfolio | Borrower | $5,521,000 | .32% | $48 |
Software and IT Services Portfolio | Borrower | $6,003,000 | .32% | $53 |
Tech Hardware Portfolio | Borrower | $6,058,950 | .30% | $1,002 |
Technology Portfolio | Borrower | $16,784,740 | .30% | $38,624 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
IT Services Portfolio | 50,229,276 | 176,110,878 | 72,654,502 |
Semiconductors Portfolio | 265,874,593 | 95,687,781 | 34,573,161 |
Software and IT Services Portfolio | 153,436,114 | 93,464,356 | 53,733,786 |
Tech Hardware Portfolio | 29,398,337 | 15,716,383 | 2,088,914 |
Technology Portfolio | 1,623,599,781 | 1,355,001,228 | 29,566,409 |
Other. During the period, the investment adviser reimbursed the Funds for certain losses as follows:
Amount ($) | |
IT Services Portfolio | 2,381 |
Software and IT Services Portfolio | 3,500 |
Tech Hardware Portfolio | 39,342 |
Technology Portfolio | 34,082 |
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 listed below. During the period, there were no borrowings on this line of credit.
Amount | |
IT Services Portfolio | $7,137 |
Semiconductors Portfolio | 11,184 |
Software and IT Services Portfolio | 21,808 |
Tech Hardware Portfolio | 1,426 |
Technology Portfolio | 21,099 |
7. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the 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. Affiliated security lending activity, if any, was as follows:
Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
IT Services Portfolio | $22,115 | $2,050 | $798,409 |
Semiconductors Portfolio | $7,669 | $– | $– |
Software and IT Services Portfolio | $13,155 | $– | $– |
Tech Hardware Portfolio | $3,217 | $– | $– |
Technology Portfolio | $58,870 | $7,430 | $– |
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. Any open loans, including accrued interest, at period end are presented under the caption "Notes payable" in the Statement of Assets and Liabilities, if applicable. 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 | $3,708,000 | .57% | $236 |
Technology Portfolio | $10,718,250 | .57% | $8,139 |
9. Expense Reductions.
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.
Custodian credits | |
Software and IT Services Portfolio | $138 |
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses as follows:
Amount | |
IT Services Portfolio | $90,818 |
Semiconductors Portfolio | 176,646 |
Software and IT Services Portfolio | 295,893 |
Tech Hardware Portfolio | 19,756 |
Technology Portfolio | 285,724 |
10. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a fund. The risk of material loss from such claims is considered remote.
11. Merger Information.
On November 12, 2021, Tech Hardware Portfolio acquired all of the assets and assumed all of the liabilities of Communications Equipment Portfolio ("Target Fund") pursuant to an Agreement and Plan of Reorganization approved by the Board of Trustees ("The Board"). The securities held by the Target Fund were the primary assets acquired by the Fund. The acquisition was accomplished by an exchange of shares of the Fund for shares then outstanding of the Target Fund at its respective net asset value on the acquisition date. The reorganization provides shareholders of the Target Fund access to a larger portfolio with a similar investment objective and lower projected expenses. For financial reporting purposes, the assets and liabilities of the Target Fund and shares issued by the Fund were recorded at fair value; however, the cost basis of the investments received from the Target Fund were carried forward and will be utilized for purposes of the Fund's ongoing reporting of realized and unrealized gains and losses to more closely align subsequent reporting of realized gains with amounts distributable to shareholders for tax purposes. The reorganization qualified as a tax-free reorganization for federal income tax purposes with no gain or loss recognized to the funds or their shareholders.
Target Fund | Investments $ | Unrealized appreciation (depreciation) $ | Net Assets $ | Shares Exchanged | Shares Exchanged Ratio |
Communications Equipment Portfolio | 187,085,638 | 75,879,300 | 189,381,924 | 1,755,160 | .4176867470 |
Surviving Fund | Net Assets $ | Total net assets after the acquisition $ |
Tech Hardware Portfolio | 798,971,790 | 988,353,714 |
Pro forma results of operations of the combined entity for the entire period ended February 28, 2022, as though the acquisition had occurred as of the beginning of the year (rather than on the actual acquisition date), are as follows:
Net investment income (loss) | $3,770,342 |
Total net realized gain (loss) | 191,061,539 |
Total change in net unrealized appreciation (depreciation) | (130,804,365) |
Net increase (decrease) in net assets resulting from operations | $64,027,516 |
Because the combined investment portfolios have been managed as a single portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of the acquired fund that have been included in the Tech Hardware Portfolio's accompanying Statement of Operations since November 12, 2021.
12. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Funds' performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and Shareholders of IT Services Portfolio, Semiconductors Portfolio, Software and IT Services Portfolio, Tech Hardware Portfolio and Technology Portfolio
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of IT Services Portfolio, Semiconductors Portfolio, Software and IT Services Portfolio, Tech Hardware Portfolio and Technology Portfolio (five of the funds constituting Fidelity Select Portfolios, referred to hereafter as the “Funds”) as of February 28, 2022, the related statements of operations for the year ended February 28, 2022, the statements of changes in net assets for each of the two years in the period ended February 28, 2022, including the related notes, and the financial highlights for each of the five years in the period ended February 28, 2022 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of February 28, 2022, 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 ended February 28, 2022 and the financial highlights for each of the five years in the period ended February 28, 2022 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 28, 2022 by correspondence with the custodians, issuers of privately offered securities 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 opinions.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
April 12, 2022
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
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 317 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. Robert A. Lawrence is an interested person and currently serves as Acting 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. David M. Thomas serves as Lead Independent Trustee 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 high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the funds' Board. 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 FMR 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 FMR, 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, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. 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+
Bettina Doulton (1964)
Year of Election or Appointment: 2020
Trustee
Ms. Doulton also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Doulton served in a variety of positions at Fidelity Investments, including as a managing director of research (2006-2007), portfolio manager to certain Fidelity® funds (1993-2005), equity analyst and portfolio assistant (1990-1993), and research assistant (1987-1990). Ms. Doulton currently owns and operates Phi Builders + Architects and Cellardoor Winery. Previously, Ms. Doulton served as a member of the Board of Brown Capital Management, LLC (2014-2018).
Robert A. Lawrence (1952)
Year of Election or Appointment: 2020
Trustee
Acting Chairman of the Board of Trustees
Mr. Lawrence also serves as Trustee of other funds. Previously, Mr. Lawrence served as a Member of the Advisory Board of certain funds. Prior to his retirement in 2008, Mr. Lawrence served as Vice President of certain Fidelity® funds (2006-2008), Senior Vice President, Head of High Income Division of Fidelity Management & Research Company (investment adviser firm, 2006-2008), and President of Fidelity Strategic Investments (investment adviser firm, 2002-2005).
* 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 FMR.
+ 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+
Thomas P. Bostick (1956)
Year of Election or Appointment: 2021
Trustee
Lieutenant General Bostick also serves as Trustee of other Fidelity® funds. Prior to his retirement, General Bostick (United States Army, Retired) held a variety of positions within the U.S. Army, including Commanding General and Chief of Engineers, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff and Director of Human Resources, U.S. Army (2009-2012). General Bostick currently serves as a member of the Board and Finance and Governance Committees of CSX Corporation (transportation, 2020-present) and a member of the Board and Corporate Governance and Nominating Committee of Perma-Fix Environmental Services, Inc. (nuclear waste management, 2020-present). General Bostick serves as Chief Executive Officer of Bostick Global Strategies, LLC (consulting, 2016-present) and as a member of the Board of HireVue, Inc. (video interview and assessment, 2020-present). Previously, General Bostick served as a Member of the Advisory Board of certain Fidelity® funds (2021), President, Intrexon Bioengineering (2018-2020) and Chief Operating Officer (2017-2020) and Senior Vice President of the Environment Sector (2016-2017) of Intrexon Corporation (biopharmaceutical company).
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 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 currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York and a member of the Board of The Leadership Academy (previously NYC Leadership Academy) (2012-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Vicki L. Fuller (1957)
Year of Election or Appointment: 2020
Trustee
Ms. Fuller also serves as Trustee of other Fidelity® funds. Previously, Ms. Fuller served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of two Blackstone business development companies (2020-present), as a member of the Board of Treliant, LLC (consulting, 2019-present), as a member of the Advisory Board of Ariel Alternatives, LLC (private equity, 2021-present) and as a member of the Board and Chair of the Audit Committee of Gusto, Inc. (software, 2021-present). In addition, Ms. Fuller currently serves as a member of the Board of Roosevelt University (2019-present) and as a member of the Executive Board of New York University’s Stern School of Business. Ms. Fuller previously served as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-2021).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Trustee
Ms. Kampling also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Finance Committee and Governance, Compensation and Nominating Committee of Xcel Energy Inc. (utilities company, 2020-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee and Chair of the Executive Development and Compensation Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a Member of the Advisory Board of certain Fidelity® funds (2020), a member of the Board, Compensation Committee and Executive Committee and Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-2021), a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Thomas A. Kennedy (1955)
Year of Election or Appointment: 2021
Trustee
Mr. Kennedy also serves as Trustee of other Fidelity® funds. Previously, Mr. Kennedy served as a Member of the Advisory Board of certain Fidelity® funds (2020) and held a variety of positions at Raytheon Company (aerospace and defense, 1983-2020), including Chairman and Chief Executive Officer (2014-2020) and Executive Vice President and Chief Operating Officer (2013-2014). Mr. Kennedy currently serves as Executive Chairman of the Board of Directors of Raytheon Technologies Corporation (aerospace and defense, 2020-present). He is also a member of the Rutgers School of Engineering Industry Advisory Board (2011-present) and a member of the UCLA Engineering Dean’s Executive Board (2016-present).
Oscar Munoz (1959)
Year of Election or Appointment: 2021
Trustee
Mr. Munoz also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Munoz served as Executive Chairman (2020-2021), Chief Executive Officer (2015-2020), President (2015-2016) and a member of the Board (2010-2021) of United Airlines Holdings, Inc. Mr. Munoz currently serves as a member of the Board of CBRE Group, Inc. (commercial real estate, 2020-present), a member of the Board of Univision Communications, Inc. (Hispanic media, 2020-present) and a member of the Advisory Board of Salesforce.com, Inc. (cloud-based software, 2020-present). Previously, Mr. Munoz served as a Member of the Advisory Board of certain Fidelity® funds (2021).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Lead Independent Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as a member of the Board of Fortune Brands Home and Security (home and security products, 2004-present) and as Director (2013-present) and Non-Executive Chairman of the Board (2022-present) of Interpublic Group of Companies, Inc. (marketing communication).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Trustee
Ms. Tomasky also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Executive Committee, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present) and as a member of the Board of its subsidiary company, Public Service Electric and Gas Co. (2021-present). In addition, Ms. Tomasky currently serves as a member (2009-present) and President (2020-present) of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board and Kenyon in the World Committee of Kenyon College (2016-present). Previously, Ms. Tomasky served as a Member of the Advisory Board of certain Fidelity® funds (2020), as a member of the Board of the Columbus Regional Airport Authority (2007-2020), as a member of the Board (2011-2018) and Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee of other Fidelity® funds. Previously, Mr. Wiley served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley also previously served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018), a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018) and a member of the Board of High Point Resources (exploration and production, 2005-2020).
+ 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 (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as an officer of other funds. Mr. Brown serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
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 Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as an officer of other funds. Mr. Davis serves as Assistant Treasurer of FIMM, LLC (2021-present), FMR Capital, Inc. (2017-present), FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); 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).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2017-present). Previously, Ms. Del Prato served as President and Treasurer of The North Carolina Capital Management Trust: Cash Portfolio and Term Portfolio (2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present); Secretary of FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); and Assistant Secretary of FIMM, LLC (2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); 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).
Jason P. Pogorelec (1975)
Year of Election or Appointment: 2020
Chief Compliance Officer
Mr. Pogorelec also serves as Chief Compliance Officer of other funds. Mr. Pogorelec is a senior Vice President of Asset Management Compliance for Fidelity Investments and is an employee of Fidelity Investments (2006-present). Previously, Mr. Pogorelec served as Vice President, Associate General Counsel for Fidelity Investments (2010-2020) and Assistant Secretary of certain Fidelity funds (2015-2020).
Brett Segaloff (1972)
Year of Election or Appointment: 2021
Anti-Money Laundering (AML) Officer
Mr. Segaloff also serves as an AML Officer of other funds and other related entities. He is Director, Anti-Money Laundering (2007-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments (1996-present).
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), 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 Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as an officer of other funds. Mr. Wegmann serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2011-present). Previously, Mr. Wegmann served as Assistant Treasurer of certain Fidelity® funds (2019-2021).
Shareholder Expense Example
As a shareholder, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or redemption proceeds, as applicable and (2) ongoing costs, which generally include 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 a 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, 2021 to February 28, 2022).
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 for a class/Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If any fund is a shareholder of any underlying mutual funds or exchange-traded funds (ETFs) (the Underlying Funds), such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses incurred presented in the table. These fees and expenses are not included in the 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 actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the 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. If any fund is a shareholder of any Underlying Funds, such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses as presented in the table. These fees and expenses are not included in the 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, 2021 | Ending Account Value February 28, 2022 | Expenses Paid During Period-B September 1, 2021 to February 28, 2022 | |
IT Services Portfolio | .69% | |||
Actual | $1,000.00 | $781.00 | $3.05 | |
Hypothetical-C | $1,000.00 | $1,021.37 | $3.46 | |
Semiconductors Portfolio | .67% | |||
Actual | $1,000.00 | $1,046.80 | $3.40 | |
Hypothetical-C | $1,000.00 | $1,021.47 | $3.36 | |
Software and IT Services Portfolio | .67% | |||
Actual | $1,000.00 | $867.20 | $3.10 | |
Hypothetical-C | $1,000.00 | $1,021.47 | $3.36 | |
Tech Hardware Portfolio | .71% | |||
Actual | $1,000.00 | $969.10 | $3.47 | |
Hypothetical-C | $1,000.00 | $1,021.27 | $3.56 | |
Technology Portfolio | .67% | |||
Actual | $1,000.00 | $896.30 | $3.15 | |
Hypothetical-C | $1,000.00 | $1,021.47 | $3.36 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/ 365 (to reflect the one-half year period). The fees and expenses of any Underlying Funds are not included in each annualized expense ratio.
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 | |
IT Services Portfolio | 04/11/22 | 04/08/22 | $7.553 |
Semiconductors Portfolio | 04/11/22 | 04/08/22 | $0.696 |
Software and IT Services Portfolio | 04/11/22 | 04/08/22 | $0.929 |
Tech Hardware Portfolio | 04/11/22 | 04/08/22 | $12.129 |
Technology Portfolio | 04/11/22 | 04/08/22 | $0.705 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2022, or, if subsequently determined to be different, the net capital gain of such year.
IT Services Portfolio | $679,604,538 |
Semiconductors Portfolio | $656,784,255 |
Software and IT Services Portfolio | $999,565,921 |
Tech Hardware Portfolio | $134,069,112 |
Technology Portfolio | $756,714,999 |
Communications Equipment Portfolio hereby designates as a capital gain dividend with respect to the taxable year ended November 12, 2021, $10,780,062, or, if subsequently determined to be different, the net capital gain of such year.
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
April 2021 | November 2021 | December 2021 | |
IT Services Portfolio | 100% | – | 13% |
Semiconductors Portfolio | 29% | – | 57% |
Software and IT Services Portfolio | 16% | – | 69% |
Tech Hardware Portfolio | 2% | 12% | 12% |
Technology Portfolio | 2% | – | 8% |
Communications Equipment Portfolio | 94% | 20% | – |
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 2021 | November 2021 | December 2021 | |
IT Services Portfolio | 100% | – | 17% |
Semiconductors Portfolio | 35% | – | 68% |
Software and IT Services Portfolio | 18% | – | 76% |
Tech Hardware Portfolio | 49% | 29% | 29% |
Technology Portfolio | 3% | – | 10% |
Communications Equipment Portfolio | 95% | 24% | – |
A percentage of the dividends distributed during the fiscal year for the following fund qualifies as a section 199A dividend:
Tech Hardware Portfolio | |
April 2021 | 1% |
The funds hereby designate the percentages noted below of the short-term capital gain dividends distributed during the fiscal year as qualifying to be taxed as short-term capital gain dividends for nonresident alien shareholders:
April 2021 | November 2021 | December 2021 | |
IT Services Portfolio | 100.00% | – | 100.00% |
Semiconductors Portfolio | 99.65% | – | 100.00% |
Software and IT Services Portfolio | 100.00% | – | 100.00% |
Tech Hardware Portfolio | 99.95% | 99.97% | 95.63% |
Technology Portfolio | 100.00% | – | 100.00% |
Communications Equipment Portfolio | – | 99.95% | – |
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 | |
Tech Hardware Portfolio | 04/12/21 | $0.6100 | $0.1054 |
The funds will notify shareholders in January 2023 of amounts for use in preparing 2022 income tax returns.
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Funds have adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage each Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. Each Fund’s Board of Trustees (the Board) has designated each Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2020 through November 30, 2021. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
Proxy Voting Results
A special meeting of Computers Portfolio's shareholders was held on October 20, 2021. The results of votes taken among shareholders on the proposal before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 2
To modify Computers Portfolio's fundamental concentration policy.
# of Votes | % of Votes | |
Affirmative | 375,326,780.69 | 89.460 |
Against | 25,336,632.28 | 6.039 |
Abstain | 18,883,835.89 | 4.501 |
TOTAL | 419,547,266.86 | 100.000 |
SELTEC-ANN-0422
1.813669.117
Fidelity® Select Portfolios®
Materials Sector
Chemicals Portfolio
Gold Portfolio
Materials Portfolio
February 28, 2022
Includes Fidelity and Fidelity Advisor share classes
![Fidelity Investments](https://capedge.com/proxy/N-CSR/0001379491-22-001658/fid_sun.jpg)
![Fidelity Investments](https://capedge.com/proxy/N-CSR/0001379491-22-001658/fipro_logo.jpg)
Contents
Chemicals Portfolio | |
Gold Portfolio | |
Materials Portfolio | |
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 if you’re an individual investing directly with Fidelity, call 1-800-835-5092 if you’re a plan sponsor or participant with Fidelity as your recordkeeper or call 1-877-208-0098 on institutional accounts or if you’re an advisor or invest through one 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. © 2022 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-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT 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.
Note to Shareholders:
Early in 2020, the outbreak and spread of COVID-19 emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread. The pandemic prompted a number of measures to limit the spread of COVID-19, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. To help stem the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
In general, the overall impact of the pandemic lessened in 2021, amid a resilient economy and widespread distribution of three COVID-19 vaccines granted emergency use authorization from the U.S. Food and Drug Administration (FDA) early in the year. Still, the situation remains dynamic, and the extent and duration of its influence on financial markets and the economy is highly uncertain, due in part to a recent spike in cases based on highly contagious variants of the coronavirus.
Extreme events such as the COVID-19 crisis are exogenous shocks that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets. Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we continue to take extra steps to be responsive to customer needs. We encourage you to visit us online, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Chemicals Portfolio | 16.90% | 7.12% | 10.21% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Chemicals Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789797683_740.jpg)
Period Ending Values | ||
$26,441 | Chemicals Portfolio | |
$39,037 | S&P 500® Index |
Chemicals Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager David Wagner: For the fiscal year ending February 28, 2022, the fund gained 16.90%, outperforming the 11.18% advance of the MSCI U.S. IMI Chemicals 25/50 Linked Index, as well as the broad-based S&P 500® index. Versus the industry index, security selection was the primary contributor, especially in the commodity chemicals category. Stock picks in fertilizers & agricultural chemicals and an overweighting in diversified chemicals also helped. The biggest individual relative contributor was an overweight position in Olin (+67%). Olin was among the fund's biggest holdings this period, but we reduced our exposure. Also bolstering performance was an underweighting in Ecolab, which returned about -15%. Another notable relative contributor was an overweighting in Huntsman (+52%), which was one of our largest holdings as of February 28. Conversely, the biggest detractor from performance versus the industry index was an overweighting in commodity chemicals. Stock selection in metal & glass containers and an underweighting in industrial gases also hurt relative performance. The biggest individual relative detractor was an underweight position in Albemarle (+26%). This period we increased our stake. Also holding back performance was our lighter-than-index stake in FMC, which gained about 17%. FMC was not held at period end. Another notable relative detractor was our outsized stake in Ashland Global Holdings (+2%), a position that was sold 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.
Chemicals Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
Linde PLC | 20.3 |
Sherwin-Williams Co. | 8.8 |
Corteva, Inc. | 6.0 |
DuPont de Nemours, Inc. | 5.5 |
The Mosaic Co. | 4.8 |
Huntsman Corp. | 4.1 |
Air Products & Chemicals, Inc. | 4.0 |
PPG Industries, Inc. | 3.9 |
CF Industries Holdings, Inc. | 3.6 |
Eastman Chemical Co. | 3.4 |
64.4 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Chemicals | 97.8% | |
Trading Companies & Distributors | 2.0% | |
All Others* | 0.2% |
* Includes short-term investments and net other assets (liabilities).
Chemicals Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 99.8% | |||
Shares | Value | ||
Chemicals - 97.8% | |||
Commodity Chemicals - 12.7% | |||
Cabot Corp. | 52,700 | $3,855,532 | |
Dow, Inc. | 211,000 | 12,440,560 | |
LG Chemical Ltd. | 6,770 | 3,213,000 | |
LyondellBasell Industries NV Class A | 23,800 | 2,314,074 | |
Olin Corp. | 243,700 | 12,552,987 | |
Orion Engineered Carbons SA | 523,726 | 8,138,702 | |
Trinseo PLC (a) | 186,700 | 9,700,932 | |
Tronox Holdings PLC | 1,075,669 | 21,836,081 | |
Westlake Corp. | 196,756 | 21,704,154 | |
95,756,022 | |||
Diversified Chemicals - 6.6% | |||
Huntsman Corp. | 777,800 | 31,454,232 | |
The Chemours Co. LLC | 676,559 | 18,673,028 | |
50,127,260 | |||
Fertilizers & Agricultural Chemicals - 14.4% | |||
CF Industries Holdings, Inc. | 335,417 | 27,232,506 | |
Corteva, Inc. | 869,893 | 45,260,533 | |
The Mosaic Co. | 699,000 | 36,648,570 | |
109,141,609 | |||
Industrial Gases - 24.3% | |||
Air Products & Chemicals, Inc. | 129,311 | 30,556,189 | |
Linde PLC | 524,916 | 153,926,369 | |
184,482,558 | |||
Specialty Chemicals - 39.8% | |||
Albemarle Corp. U.S. | 84,900 | 16,631,061 | |
Avient Corp. | 165,000 | 8,644,350 | |
Axalta Coating Systems Ltd. (b) | 288,400 | 7,798,336 | |
Celanese Corp. Class A | 182,300 | 25,390,744 | |
DuPont de Nemours, Inc. | 543,894 | 42,081,079 | |
Eastman Chemical Co. | 215,200 | 25,494,744 | |
Ecolab, Inc. | 101,300 | 17,855,138 | |
Element Solutions, Inc. | 1,002,243 | 24,635,133 | |
H.B. Fuller Co. | 118,100 | 8,074,497 | |
HEXPOL AB (B Shares) | 492,700 | 5,041,094 | |
International Flavors & Fragrances, Inc. | 174,316 | 23,184,028 | |
Livent Corp. (b) | 200 | 4,710 | |
PPG Industries, Inc. | 221,000 | 29,492,450 | |
Quaker Houghton (a) | 3,900 | 723,879 | |
Sherwin-Williams Co. | 255,099 | 67,124,200 | |
302,175,443 | |||
TOTAL CHEMICALS | 741,682,892 | ||
Trading Companies & Distributors - 2.0% | |||
Trading Companies & Distributors - 2.0% | |||
Univar, Inc. (b) | 497,800 | 15,287,438 | |
TOTAL COMMON STOCKS | |||
(Cost $452,434,012) | 756,970,330 | ||
Money Market Funds - 0.4% | |||
Fidelity Cash Central Fund 0.07% (c) | 1,042,234 | 1,042,443 | |
Fidelity Securities Lending Cash Central Fund 0.07% (c)(d) | 2,247,028 | 2,247,252 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $3,289,695) | 3,289,695 | ||
TOTAL INVESTMENT IN SECURITIES - 100.2% | |||
(Cost $455,723,707) | 760,260,025 | ||
NET OTHER ASSETS (LIABILITIES) - (0.2)% | (1,360,383) | ||
NET ASSETS - 100% | $758,899,642 |
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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $322,782 | $102,442,983 | $101,723,322 | $1,761 | $-- | $-- | $1,042,443 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 23,872,852 | 78,420,947 | 100,046,547 | 38,315 | -- | -- | 2,247,252 | 0.0% |
Total | $24,195,634 | $180,863,930 | $201,769,869 | $40,076 | $-- | $-- | $3,289,695 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $756,970,330 | $748,716,236 | $8,254,094 | $-- |
Money Market Funds | 3,289,695 | 3,289,695 | -- | -- |
Total Investments in Securities: | $760,260,025 | $752,005,931 | $8,254,094 | $-- |
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 | 72.0% |
Ireland | 21.6% |
United Kingdom | 2.9% |
Luxembourg | 1.1% |
Bermuda | 1.0% |
Others (Individually Less Than 1%) | 1.4% |
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, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $2,120,076) — See accompanying schedule: Unaffiliated issuers (cost $452,434,012) | $756,970,330 | |
Fidelity Central Funds (cost $3,289,695) | 3,289,695 | |
Total Investment in Securities (cost $455,723,707) | $760,260,025 | |
Receivable for fund shares sold | 229,252 | |
Dividends receivable | 1,528,616 | |
Distributions receivable from Fidelity Central Funds | 343 | |
Prepaid expenses | 7,241 | |
Other receivables | 160,345 | |
Total assets | 762,185,822 | |
Liabilities | ||
Payable for fund shares redeemed | $386,358 | |
Accrued management fee | 339,007 | |
Other affiliated payables | 134,979 | |
Other payables and accrued expenses | 190,736 | |
Collateral on securities loaned | 2,235,100 | |
Total liabilities | 3,286,180 | |
Net Assets | $758,899,642 | |
Net Assets consist of: | ||
Paid in capital | $427,878,762 | |
Total accumulated earnings (loss) | 331,020,880 | |
Net Assets | $758,899,642 | |
Net Asset Value, offering price and redemption price per share ($758,899,642 ÷ 44,786,516 shares) | $16.94 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $12,594,315 | |
Income from Fidelity Central Funds (including $38,315 from security lending) | 40,076 | |
Total income | 12,634,391 | |
Expenses | ||
Management fee | $4,166,413 | |
Transfer agent fees | 1,363,839 | |
Accounting fees | 275,376 | |
Custodian fees and expenses | 6,108 | |
Independent trustees' fees and expenses | 2,836 | |
Registration fees | 34,728 | |
Audit | 49,791 | |
Legal | 1,480 | |
Miscellaneous | 5,684 | |
Total expenses before reductions | 5,906,255 | |
Expense reductions | (18,141) | |
Total expenses after reductions | 5,888,114 | |
Net investment income (loss) | 6,746,277 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 54,082,629 | |
Foreign currency transactions | (3,566) | |
Total net realized gain (loss) | 54,079,063 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | 56,433,442 | |
Assets and liabilities in foreign currencies | (26,186) | |
Total change in net unrealized appreciation (depreciation) | 56,407,256 | |
Net gain (loss) | 110,486,319 | |
Net increase (decrease) in net assets resulting from operations | $117,232,596 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $6,746,277 | $8,353,372 |
Net realized gain (loss) | 54,079,063 | 17,936,269 |
Change in net unrealized appreciation (depreciation) | 56,407,256 | 200,509,119 |
Net increase (decrease) in net assets resulting from operations | 117,232,596 | 226,798,760 |
Distributions to shareholders | (9,969,040) | (7,889,774) |
Share transactions | ||
Proceeds from sales of shares | 88,405,055 | 51,330,497 |
Reinvestment of distributions | 9,337,590 | 7,425,299 |
Cost of shares redeemed | (146,786,766) | (233,425,777) |
Net increase (decrease) in net assets resulting from share transactions | (49,044,121) | (174,669,981) |
Total increase (decrease) in net assets | 58,219,435 | 44,239,005 |
Net Assets | ||
Beginning of period | 700,680,207 | 656,441,202 |
End of period | $758,899,642 | $700,680,207 |
Other Information | ||
Shares | ||
Sold | 5,113,175 | 4,348,003 |
Issued in reinvestment of distributions | 520,200 | 515,288 |
Redeemed | (8,619,384) | (19,763,574) |
Net increase (decrease) | (2,986,009) | (14,900,283) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Chemicals Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B | 2018 B |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $14.67 | $10.47 | $13.57 | $17.34 | $16.24 |
Income from Investment Operations | |||||
Net investment income (loss)C,D | .15 | .15 | .15 | .23 | .19 |
Net realized and unrealized gain (loss) | 2.34 | 4.21 | (2.39) | (2.17) | 2.36 |
Total from investment operations | 2.49 | 4.36 | (2.24) | (1.94) | 2.55 |
Distributions from net investment income | (.14) | (.16) | (.20) | (.21) | (.16) |
Distributions from net realized gain | (.08) | – | (.66) | (1.62) | (1.29) |
Total distributions | (.22) | (.16) | (.86) | (1.83) | (1.45) |
Net asset value, end of period | $16.94 | $14.67 | $10.47 | $13.57 | $17.34 |
Total ReturnE | 16.90% | 41.65% | (17.63)% | (11.10)% | 16.31% |
Ratios to Average Net AssetsD,F,G | |||||
Expenses before reductions | .74% | .79% | .78% | .77% | .77% |
Expenses net of fee waivers, if any | .74% | .79% | .78% | .77% | .77% |
Expenses net of all reductions | .74% | .78% | .77% | .76% | .77% |
Net investment income (loss) | .85% | 1.28% | 1.21% | 1.50% | 1.12% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $758,900 | $700,680 | $656,441 | $1,153,379 | $1,790,221 |
Portfolio turnover rateH | 15% | 50% | 77% | 62% | 62% |
A For the year ended February 29.
B Per share amounts have been adjusted to reflect the impact of the 10 for 1 share split that occurred on August 10, 2018.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
H Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2022
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.
Funds may 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
Based on its investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the investing fund. These strategies are consistent with the investment objectives of the investing fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the investing fund.
Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio(a) |
Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | Less than .005% |
(a) Expenses expressed as a percentage of average net assets and are as of each underlying Central Fund's most recent annual or semi-annual shareholder report.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which contain the significant accounting policies (including investment valuation policies) of those funds, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies. 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 Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. 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 – Unadjusted 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. 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, 2022 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. Certain 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 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 include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable.
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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. 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 certain Funds, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in affiliated mutual funds, are marked-to-market and remain in a fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees presented below are included in the accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, as applicable.
Chemicals Portfolio | $158,258 |
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, 2022, 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, deferred Trustees compensation, capital loss carryforwards and losses deferred due to wash sales.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows:
Gross unrealized appreciation | $312,915,750 |
Gross unrealized depreciation | (9,073,701) |
Net unrealized appreciation (depreciation) | $303,842,049 |
Tax Cost | $456,417,976 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $334,556 |
Undistributed long-term capital gain | $27,012,158 |
Net unrealized appreciation (depreciation) on securities and other investments | $303,821,813 |
The tax character of distributions paid was as follows:
February 28, 2022 | February 28, 2021 | |
Ordinary Income | $6,405,447 | $ 7,889,774 |
Long-term Capital Gains | 3,563,593 | – |
Total | $9,969,040 | $ 7,889,774 |
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, as applicable, are noted in the table below.
Purchases ($) | Sales ($) | |
Chemicals Portfolio | 119,121,545 | 170,440,346 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company 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 .22% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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 .52% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (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 .17% of average net assets.
Accounting 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. For the period, the fees were equivalent to the following annual rates:
% of Average Net Assets | |
Chemicals Portfolio | .03 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 | |
Chemicals Portfolio | $4,227 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
Chemicals Portfolio | 9,651,125 | 7,639,066 | 3,864,653 |
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 listed below. During the period, there were no borrowings on this line of credit.
Amount | |
Chemicals Portfolio | $1,322 |
7. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the 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. Affiliated security lending activity, if any, was as follows:
Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
Chemicals Portfolio | $752 | $– | $– |
8. Expense Reductions.
During the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses in the amount of $18,141.
9. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a fund. The risk of material loss from such claims is considered remote.
10. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Fund's performance.
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Class A (incl. 5.75% sales charge) | 4.02% | 5.13% | (4.97)% |
Class M (incl. 3.50% sales charge) | 6.23% | 5.32% | (5.01)% |
Class C (incl. contingent deferred sales charge) | 8.62% | 5.66% | (4.94)% |
Gold Portfolio | 10.71% | 6.72% | (4.11)% |
Class I | 10.74% | 6.73% | (4.08)% |
Class Z | 10.88% | 6.82% | (4.04)% |
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.
The initial offering of Class Z shares took place on October 2, 2018. Returns prior to October 2, 2018, are those of Class I.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Gold Portfolio, a class of the fund, on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img795736877_740.jpg)
Period Ending Values | ||
$6,570 | Gold Portfolio | |
$39,037 | S&P 500® Index |
Gold Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Steven Calhoun: For the fiscal year ending February 28, 2022, the fund's share classes (excluding sales charges, if applicable) gained roughly 10% to 11%, underperforming the 11.31% gain of the S&P Global BMI Gold Capped Index 20/45 Linked Index, as well as the broad-based S&P 500® index. The primary detractor from performance versus the industry index was our security selection in silver. Security selection in diversified metals & mining and precious metals & minerals also hurt. The biggest individual relative detractor was an underweight position in Gold Fields (+74%), which was among the largest holdings at period end. Our position in Gatos Silver (-76%) was a key detractor. We increased our out-of-index position the past 12 months. Another notable relative detractor was an out-of-index stake in Pure Gold Mining (-55%). In contrast, the biggest contributor to performance versus the industry index was our stock picks in gold. Not owning Polymetal International, an index component that returned -75%, was the fund's top individual relative contributor. Our second-largest relative contributor this period was avoiding Polyus Gold, an index component that returned approximately -42%. Another notable relative contributor was an outsized stake in Wesdome Gold Mines (+68%).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.
Gold Portfolio
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, 2022
(excluding repurchase agreements) | % of fund's net assets |
Newmont Corp. | 15.1 |
Barrick Gold Corp. (Canada) | 11.0 |
Franco-Nevada Corp. | 9.3 |
Agnico Eagle Mines Ltd. (Canada) | 6.5 |
Wheaton Precious Metals Corp. | 6.3 |
Newcrest Mining Ltd. | 4.3 |
Gold Fields Ltd. | 4.0 |
Northern Star Resources Ltd. | 3.6 |
Orla Mining Ltd. | 2.9 |
Evolution Mining Ltd. | 2.7 |
65.7 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Gold | 92.6% | |
Silver | 2.4% | |
Diversified Metals & Mining | 2.1% | |
Copper | 1.1% | |
Commodities & Related Investments* | 0.8% | |
Precious Metals & Minerals | 0.5% | |
All Others** | 0.5% |
* Includes gold bullion and/or silver bullion.
** Includes short-term investments and net other assets (liabilities).
Geographic Diversification (% of fund's net assets)
As of February 28, 2022 | ||
Canada | 64.2% | |
United States of America* | 20.8% | |
Australia | 10.6% | |
South Africa | 4.0% | |
United Kingdom | 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 Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 98.7% | |||
Shares | Value | ||
Australia - 10.6% | |||
Metals & Mining - 10.6% | |||
Gold - 10.6% | |||
Evolution Mining Ltd. | 15,000,000 | $46,519,515 | |
Newcrest Mining Ltd. | 4,000,000 | 74,576,484 | |
Northern Star Resources Ltd. | 8,500,000 | 63,649,300 | |
184,745,299 | |||
Canada - 64.2% | |||
Metals & Mining - 64.2% | |||
Diversified Metals & Mining - 2.1% | |||
BeMetals Corp. (a) | 2,000,000 | 347,140 | |
New Pacific Metals Corp. (a)(b) | 3,000,000 | 9,396,450 | |
Triple Flag Precious Metals Corp. | 1,000,000 | 12,230,000 | |
Western Copper & Gold Corp. (TSX) (a)(b)(c) | 8,000,000 | 14,327,416 | |
36,301,006 | |||
Gold - 61.1% | |||
Agnico Eagle Mines Ltd. (Canada) | 2,250,000 | 113,662,722 | |
Alamos Gold, Inc. | 3,000,000 | 22,106,509 | |
Artemis Gold, Inc. (a) | 2,500,000 | 12,189,349 | |
Ascot Resources Ltd. (a)(c)(d) | 20,000,000 | 17,199,211 | |
B2Gold Corp. (a) | 7,000,000 | 28,276,134 | |
Barrick Gold Corp. (Canada) (b) | 8,500,000 | 192,130,178 | |
Bonterra Resources, Inc. (a)(c) | 6,000,000 | 6,011,834 | |
Bonterra Resources, Inc. (c)(d) | 1,500,000 | 1,352,663 | |
Franco-Nevada Corp. | 1,100,000 | 161,992,899 | |
Gold Standard Ventures Corp. (a)(b)(c) | 25,000,000 | 10,256,410 | |
i-80 Gold Corp. (a)(c) | 10,000,000 | 21,696,252 | |
i-80 Gold Corp. (c) | 2,500,000 | 5,369,822 | |
i-80 Gold Corp. warrants 9/30/22 (a)(c) | 625,000 | 76,880 | |
Kinross Gold Corp. | 5,000,000 | 24,930,966 | |
Lundin Gold, Inc. (a) | 3,000,000 | 24,189,349 | |
Maple Gold Mines Ltd. (a)(b)(c) | 20,000,000 | 5,285,996 | |
Marathon Gold Corp. (a)(b) | 10,000,000 | 22,406,312 | |
Nomad Royalty Co. Ltd. | 1,000,000 | 6,477,318 | |
Novagold Resources, Inc. (a) | 3,000,000 | 20,994,083 | |
OceanaGold Corp. (a) | 10,000,000 | 18,856,016 | |
Orla Mining Ltd. (a)(b)(c) | 13,000,000 | 51,692,308 | |
Osisko Development Corp. rights (a)(d)(e) | 2,000,000 | 8,921,251 | |
Osisko Gold Royalties Ltd. | 2,000,000 | 24,694,280 | |
Osisko Mining, Inc. (a) | 6,000,000 | 18,603,550 | |
Pretium Resources, Inc. (a) | 1,000,000 | 14,587,771 | |
Pure Gold Mining, Inc. (a)(b)(c) | 25,000,000 | 16,173,570 | |
Pure Gold Mining, Inc. warrants 3/28/23 (a)(c) | 1,500,000 | 58,434 | |
Seabridge Gold, Inc. (a) | 1,000,000 | 17,285,996 | |
Skeena Resources Ltd. (a)(b) | 2,000,000 | 20,875,740 | |
Torex Gold Resources, Inc. (a) | 1,000,000 | 12,686,391 | |
Victoria Gold Corp. (a) | 2,000,000 | 25,341,223 | |
Wesdome Gold Mines, Inc. (a) | 2,500,000 | 28,145,957 | |
Wheaton Precious Metals Corp. | 2,500,000 | 109,546,351 | |
Yamana Gold, Inc. | 1,000,000 | 4,915,187 | |
1,068,988,912 | |||
Precious Metals & Minerals - 0.5% | |||
SilverCrest Metals, Inc. (a) | 1,000,000 | 8,702,170 | |
Silver - 0.5% | |||
Alexco Resource Corp. (a)(b) | 5,000,000 | 7,928,994 | |
GoGold Resources, Inc. (a) | 335,200 | 793,373 | |
8,722,367 | |||
TOTAL METALS & MINING | 1,122,714,455 | ||
South Africa - 4.0% | |||
Metals & Mining - 4.0% | |||
Gold - 4.0% | |||
Gold Fields Ltd. | 5,000,000 | 69,618,878 | |
United Kingdom - 0.4% | |||
Metals & Mining - 0.4% | |||
Gold - 0.4% | |||
Solgold PLC (a) | 20,000,000 | 8,017,158 | |
United States of America - 19.5% | |||
Metals & Mining - 19.5% | |||
Copper - 1.1% | |||
Freeport-McMoRan, Inc. | 400,000 | 18,780,000 | |
Gold - 16.5% | |||
Newmont Corp. | 4,000,000 | 264,799,998 | |
Royal Gold, Inc. | 200,000 | 24,252,000 | |
289,051,998 | |||
Silver - 1.9% | |||
Gatos Silver, Inc. (a)(b)(c) | 5,000,000 | 16,850,000 | |
Hecla Mining Co. (b) | 3,000,000 | 17,280,000 | |
34,130,000 | |||
TOTAL METALS & MINING | 341,961,998 | ||
TOTAL COMMON STOCKS | |||
(Cost $1,134,297,911) | 1,727,057,788 | ||
Troy Ounces | |||
Commodities - 0.8% | |||
Gold Bullion(a) | |||
(Cost $6,051,546) | 6,980 | 13,333,056 | |
Shares | |||
Money Market Funds - 9.4% | |||
Fidelity Cash Central Fund 0.07% (f) | 58,592,186 | 58,603,905 | |
Fidelity Securities Lending Cash Central Fund 0.07% (f)(g) | 105,800,197 | 105,810,777 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $164,414,682) | 164,414,682 | ||
TOTAL INVESTMENT IN SECURITIES - 108.9% | |||
(Cost $1,304,764,139) | 1,904,805,526 | ||
NET OTHER ASSETS (LIABILITIES) - (8.9)% | (155,354,042) | ||
NET ASSETS - 100% | $1,749,451,484 |
Legend
(a) Non-income producing
(b) Security or a portion of the security is on loan at period end.
(c) Affiliated company
(d) Security or a portion of the security purchased on a delayed delivery or when-issued basis.
(e) Restricted securities (including private placements) - 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 $8,921,251 or 0.5% of net assets.
(f) 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.
(g) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
Security | Acquisition Date | Acquisition Cost |
Osisko Development Corp. rights | 2/9/22 | $7,024,190 |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $17,142,312 | $507,914,722 | $466,453,129 | $7,815 | $-- | $-- | $58,603,905 | 0.1% |
Fidelity Securities Lending Cash Central Fund 0.07% | 1,230,395 | 648,277,216 | 543,696,834 | 396,154 | -- | -- | 105,810,777 | 0.3% |
Total | $18,372,707 | $1,156,191,938 | $1,010,149,963 | $403,969 | $-- | $-- | $164,414,682 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Consolidated Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Consolidated Subsidiary
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period |
Fidelity Select Cayman Gold Ltd. | $12,094,884 | $-- | $-- | $-- | $-- | $1,258,285 | $13,353,169 |
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 | Realized Gain (loss) | Change in Unrealized appreciation (depreciation) | Value, end of period |
Ascot Resources Ltd. | $-- | $15,754,219 | $-- | $-- | $-- | $1,444,992 | $17,199,211 |
Battle North Gold Corp. | 11,931,045 | -- | 18,949,829 | -- | 5,997,126 | 1,021,658 | -- |
Bonterra Resources, Inc. | -- | 4,388,009 | -- | -- | -- | -- | -- |
Bonterra Resources, Inc. | -- | 776,877 | -- | -- | -- | 846,948 | 6,011,834 |
Bonterra Resources, Inc. | -- | 1,422,470 | -- | -- | -- | (69,807) | 1,352,663 |
Gatos Silver, Inc. | 15,633,204 | 15,966,871 | -- | -- | -- | (14,750,075) | 16,850,000 |
Gold Standard Ventures Corp. | 14,928,498 | 1,424,335 | 376,999 | -- | (68,120) | (5,651,304) | 10,256,410 |
i-80 Gold Corp. | -- | 15,180,925 | -- | -- | -- | 1,364,909 | 21,696,252 |
i-80 Gold Corp. | -- | 5,291,646 | -- | -- | -- | 78,176 | 5,369,822 |
i-80 Gold Corp. warrants 9/30/22 | -- | -- | -- | -- | -- | 76,540 | 76,880 |
Maple Gold Mines Ltd. | 4,243,281 | -- | -- | -- | -- | 1,042,715 | 5,285,996 |
Orla Mining Ltd. | 41,395,568 | 4,128,993 | 166,876 | -- | 8,012 | 6,326,611 | 51,692,308 |
Premier Gold Mines Ltd. | 27,251,297 | -- | 4,523,160 | 8,060,976 | 412,961 | (11,170,783) | -- |
Pure Gold Mining, Inc. | 14,167,052 | 10,678,008 | 352,930 | -- | (85,452) | (10,715,964) | 16,173,570 |
Pure Gold Mining, Inc. warrants 3/28/23 | -- | -- | -- | -- | -- | 58,434 | 58,434 |
Western Copper & Gold Corp. | -- | 888,853 | -- | -- | -- | -- | -- |
Western Copper & Gold Corp. (TSX) | 11,659,180 | 648,417 | 308,568 | -- | 92,622 | 1,346,912 | 14,327,416 |
Total | $141,209,125 | $76,549,623 | $24,678,362 | $8,060,976 | $6,357,149 | $(28,750,038) | $166,350,796 |
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $1,727,057,788 | $1,633,642,702 | $93,415,086 | $-- |
Commodities | 13,333,056 | 13,333,056 | -- | -- |
Money Market Funds | 164,414,682 | 164,414,682 | -- | -- |
Total Investments in Securities: | $1,904,805,526 | $1,811,390,440 | $93,415,086 | $-- |
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, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $100,016,682) — See accompanying schedule: Unaffiliated issuers (cost $974,398,246) | $1,560,706,992 | |
Fidelity Central Funds (cost $164,414,682) | 164,414,682 | |
Commodities (cost $6,051,546) | 13,333,056 | |
Other affiliated issuers (cost $159,899,665) | 166,350,796 | |
Total Investment in Securities (cost $1,304,764,139) | $1,904,805,526 | |
Cash | 20,555 | |
Foreign currency held at value (cost $124,831) | 125,131 | |
Receivable for fund shares sold | 5,531,148 | |
Dividends receivable | 1,269,336 | |
Distributions receivable from Fidelity Central Funds | 38,642 | |
Prepaid expenses | 5,973 | |
Other receivables | 226,865 | |
Total assets | 1,912,023,176 | |
Liabilities | ||
Payable for investments purchased | ||
Regular delivery | $34,485,805 | |
Delayed delivery | 12,477,318 | |
Payable for fund shares redeemed | 8,505,082 | |
Accrued management fee | 717,166 | |
Distribution and service plan fees payable | 61,220 | |
Other affiliated payables | 290,313 | |
Other payables and accrued expenses | 223,304 | |
Collateral on securities loaned | 105,811,484 | |
Total liabilities | 162,571,692 | |
Net Assets | $1,749,451,484 | |
Net Assets consist of: | ||
Paid in capital | $2,616,651,188 | |
Total accumulated earnings (loss) | (867,199,704) | |
Net Assets | $1,749,451,484 | |
Net Asset Value and Maximum Offering Price | ||
Class A: | ||
Net Asset Value and redemption price per share ($86,977,462 ÷ 3,310,587 shares)(a) | $26.27 | |
Maximum offering price per share (100/94.25 of $26.27) | $27.87 | |
Class M: | ||
Net Asset Value and redemption price per share ($26,200,671 ÷ 1,022,404 shares)(a) | $25.63 | |
Maximum offering price per share (100/96.50 of $25.63) | $26.56 | |
Class C: | ||
Net Asset Value and offering price per share ($43,031,208 ÷ 1,775,565 shares)(a) | $24.24 | |
Gold: | ||
Net Asset Value, offering price and redemption price per share ($1,330,601,545 ÷ 49,018,968 shares) | $27.14 | |
Class I: | ||
Net Asset Value, offering price and redemption price per share ($152,798,923 ÷ 5,628,414 shares) | $27.15 | |
Class Z: | ||
Net Asset Value, offering price and redemption price per share ($109,841,675 ÷ 4,044,075 shares) | $27.16 |
(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, 2022 | ||
Investment Income | ||
Dividends | $31,582,038 | |
Non-Cash dividends (including $8,060,976 earned from other affiliated issuers) | 8,060,976 | |
Income from Fidelity Central Funds (including $396,154 from security lending) | 403,969 | |
Income before foreign taxes withheld | 40,046,983 | |
Less foreign taxes withheld | (2,359,692) | |
Total income | 37,687,291 | |
Expenses | ||
Management fee | $9,448,095 | |
Transfer agent fees | 3,068,996 | |
Distribution and service plan fees | 836,891 | |
Accounting fees | 798,759 | |
Custodian fees and expenses | 82,752 | |
Independent trustees' fees and expenses | 6,744 | |
Registration fees | 138,098 | |
Audit | 68,841 | |
Legal | 1,371 | |
Interest | 890 | |
Miscellaneous | 10,777 | |
Total expenses before reductions | 14,462,214 | |
Expense reductions | (41,520) | |
Total expenses after reductions | 14,420,694 | |
Net investment income (loss) | 23,266,597 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investments: | ||
Unaffiliated issuers | 61,982,583 | |
Affiliated issuers | 6,357,149 | |
Foreign currency transactions | 1,819 | |
Total net realized gain (loss) | 68,341,551 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investments: | ||
Investments | 97,697,356 | |
Affiliated issuers | (28,750,038) | |
Assets and liabilities in foreign currencies | 39,243 | |
Commodities | 1,260,029 | |
Total change in net unrealized appreciation (depreciation) | 70,246,590 | |
Net gain (loss) | 138,588,141 | |
Net increase (decrease) in net assets resulting from operations | $161,854,738 |
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $23,266,597 | $3,205,459 |
Net realized gain (loss) | 68,341,551 | 211,518,523 |
Change in net unrealized appreciation (depreciation) | 70,246,590 | 78,075,976 |
Net increase (decrease) in net assets resulting from operations | 161,854,738 | 292,799,958 |
Distributions to shareholders | (27,126,849) | (91,091,449) |
Share transactions - net increase (decrease) | (106,344,853) | (120,585,130) |
Total increase (decrease) in net assets | 28,383,036 | 81,123,379 |
Net Assets | ||
Beginning of period | 1,721,068,448 | 1,639,945,069 |
End of period | $1,749,451,484 | $1,721,068,448 |
See accompanying notes which are an integral part of the consolidated financial statements.
Consolidated Financial Highlights
Gold Portfolio Class A
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $24.15 | $21.67 | $18.52 | $18.30 | $20.54 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .27D | (.04) | (.01)E | (.03) | (.12) |
Net realized and unrealized gain (loss) | 2.20 | 3.74 | 3.20 | .25 | (2.09) |
Total from investment operations | 2.47 | 3.70 | 3.19 | .22 | (2.21) |
Distributions from net investment income | (.35) | (1.22) | (.01) | – | – |
Distributions from net realized gain | – | – | (.03) | – | (.03) |
Total distributions | (.35) | (1.22) | (.04) | – | (.03) |
Net asset value, end of period | $26.27 | $24.15 | $21.67 | $18.52 | $18.30 |
Total ReturnF,G | 10.37% | 16.59% | 17.23% | 1.20% | (10.77)% |
Ratios to Average Net AssetsC,H,I | |||||
Expenses before reductions | 1.07% | 1.08% | 1.13% | 1.19% | 1.18% |
Expenses net of fee waivers, if any | 1.07% | 1.08% | 1.13% | 1.18% | 1.16% |
Expenses net of all reductions | 1.07% | 1.07% | 1.12% | 1.18% | 1.16% |
Net investment income (loss) | 1.02%D | (.12)% | (.05)%E | (.15)% | (.58)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $86,977 | $82,989 | $64,971 | $50,479 | $61,703 |
Portfolio turnover rateJ | 38% | 46% | 56% | 37% | 13% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.12 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .57%.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.05 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been (.26) %.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the consolidated financial statements.
Gold Portfolio Class M
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $23.57 | $21.16 | $18.11 | $17.94 | $20.19 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .19D | (.12) | (.07)E | (.07) | (.17) |
Net realized and unrealized gain (loss) | 2.16 | 3.67 | 3.12 | .24 | (2.05) |
Total from investment operations | 2.35 | 3.55 | 3.05 | .17 | (2.22) |
Distributions from net investment income | (.29) | (1.14) | – | – | – |
Distributions from net realized gain | – | – | – | – | (.03) |
Total distributions | (.29) | (1.14) | – | – | (.03) |
Net asset value, end of period | $25.63 | $23.57 | $21.16 | $18.11 | $17.94 |
Total ReturnF,G | 10.08% | 16.28% | 16.84% | .95% | (11.04)% |
Ratios to Average Net AssetsC,H,I | |||||
Expenses before reductions | 1.36% | 1.37% | 1.42% | 1.48% | 1.48% |
Expenses net of fee waivers, if any | 1.35% | 1.37% | 1.42% | 1.46% | 1.47% |
Expenses net of all reductions | 1.35% | 1.36% | 1.41% | 1.46% | 1.47% |
Net investment income (loss) | .74%D | (.42)% | (.34)%E | (.43)% | (.88)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $26,201 | $24,535 | $19,620 | $17,401 | $19,355 |
Portfolio turnover rateJ | 38% | 46% | 56% | 37% | 13% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.11 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .29%.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.04 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been (.56) %.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the consolidated financial statements.
Gold Portfolio Class C
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $22.30 | $20.07 | $17.24 | $17.15 | $19.36 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .08D | (.22) | (.14)E | (.13) | (.24) |
Net realized and unrealized gain (loss) | 2.05 | 3.49 | 2.97 | .22 | (1.95) |
Total from investment operations | 2.13 | 3.27 | 2.83 | .09 | (2.19) |
Distributions from net investment income | (.19) | (1.04) | – | – | – |
Distributions from net realized gain | – | – | – | – | (.02) |
Total distributions | (.19) | (1.04) | – | – | (.02) |
Net asset value, end of period | $24.24 | $22.30 | $20.07 | $17.24 | $17.15 |
Total ReturnF,G | 9.62% | 15.81% | 16.42% | .52% | (11.35)% |
Ratios to Average Net AssetsC,H,I | |||||
Expenses before reductions | 1.77% | 1.78% | 1.80% | 1.84% | 1.85% |
Expenses net of fee waivers, if any | 1.77% | 1.78% | 1.80% | 1.83% | 1.83% |
Expenses net of all reductions | 1.77% | 1.77% | 1.79% | 1.83% | 1.83% |
Net investment income (loss) | .32%D | (.83)% | (.72)%E | (.80)% | (1.25)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $43,031 | $51,195 | $52,375 | $67,760 | $92,724 |
Portfolio turnover rateJ | 38% | 46% | 56% | 37% | 13% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.11 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been (.12) %.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.04 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been (.94) %.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the consolidated financial statements.
Gold Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $24.93 | $22.33 | $19.07 | $18.78 | $21.02 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .36D | .06 | .06E | .03 | (.05) |
Net realized and unrealized gain (loss) | 2.27 | 3.84 | 3.30 | .26 | (2.14) |
Total from investment operations | 2.63 | 3.90 | 3.36 | .29 | (2.19) |
Distributions from net investment income | (.42) | (1.30) | (.06) | – | – |
Distributions from net realized gain | – | – | (.03) | – | (.05) |
Total distributions | (.42) | (1.30) | (.10)F | – | (.05) |
Net asset value, end of period | $27.14 | $24.93 | $22.33 | $19.07 | $18.78 |
Total ReturnG | 10.71% | 16.96% | 17.60% | 1.54% | (10.47)% |
Ratios to Average Net AssetsC,H,I | |||||
Expenses before reductions | .76% | .76% | .79% | .86% | .86% |
Expenses net of fee waivers, if any | .76% | .76% | .79% | .85% | .85% |
Expenses net of all reductions | .76% | .75% | .78% | .85% | .84% |
Net investment income (loss) | 1.33%D | .19% | .29%E | .18% | (.26)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $1,330,602 | $1,319,440 | $1,292,204 | $1,035,697 | $1,011,412 |
Portfolio turnover rateJ | 38% | 46% | 56% | 37% | 13% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.12 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .89%.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.05 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .07%.
F Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the consolidated financial statements.
Gold Portfolio Class I
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $24.93 | $22.33 | $19.07 | $18.78 | $21.02 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .36D | .05 | .06E | .04 | (.05) |
Net realized and unrealized gain (loss) | 2.27 | 3.85 | 3.30 | .25 | (2.14) |
Total from investment operations | 2.63 | 3.90 | 3.36 | .29 | (2.19) |
Distributions from net investment income | (.41) | (1.30) | (.07) | – | – |
Distributions from net realized gain | – | – | (.03) | – | (.05) |
Total distributions | (.41) | (1.30) | (.10) | – | (.05) |
Net asset value, end of period | $27.15 | $24.93 | $22.33 | $19.07 | $18.78 |
Total ReturnF | 10.74% | 16.96% | 17.60% | 1.54% | (10.47)% |
Ratios to Average Net AssetsC,G,H | |||||
Expenses before reductions | .76% | .77% | .79% | .84% | .85% |
Expenses net of fee waivers, if any | .76% | .77% | .79% | .82% | .83% |
Expenses net of all reductions | .76% | .76% | .77% | .82% | .83% |
Net investment income (loss) | 1.33%D | .18% | .30%E | .21% | (.24)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $152,799 | $137,617 | $115,699 | $84,956 | $61,677 |
Portfolio turnover rateI | 38% | 46% | 56% | 37% | 13% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.12 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .89%.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.05 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .08%.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the consolidated financial statements.
Gold Portfolio Class Z
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B |
Selected Per–Share Data | ||||
Net asset value, beginning of period | $24.94 | $22.34 | $19.08 | $16.62 |
Income from Investment Operations | ||||
Net investment income (loss)C,D | .40E | .09 | .10F | .07 |
Net realized and unrealized gain (loss) | 2.27 | 3.85 | 3.29 | 2.39 |
Total from investment operations | 2.67 | 3.94 | 3.39 | 2.46 |
Distributions from net investment income | (.45) | (1.34) | (.10) | – |
Distributions from net realized gain | – | – | (.03) | – |
Total distributions | (.45) | (1.34) | (.13) | – |
Net asset value, end of period | $27.16 | $24.94 | $22.34 | $19.08 |
Total ReturnG,H | 10.88% | 17.12% | 17.75% | 14.80% |
Ratios to Average Net AssetsD,I,J | ||||
Expenses before reductions | .63% | .64% | .65% | .68%K |
Expenses net of fee waivers, if any | .62% | .64% | .64% | .68%K |
Expenses net of all reductions | .62% | .62% | .63% | .67%K |
Net investment income (loss) | 1.47%E | .32% | .44%F | .97%K |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $109,842 | $105,293 | $95,076 | $3,037 |
Portfolio turnover rateL | 38% | 46% | 56% | 37% |
A For the year ended February 29.
B For the period October 2, 2018 (commencement of sale of shares) through February 28, 2019.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.12 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.02%.
F Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.05 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .22%.
G Total returns for periods of less than one year are not annualized.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
K Annualized
L Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the consolidated financial statements.
Notes to Consolidated Financial Statements
For the period ended February 28, 2022
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 M, Class C, Gold, Class I and Class Z 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. Effective June 21, 2021, Class C shares will automatically convert to Class A shares after a holding period of eight years from the initial date of purchase, with certain exceptions. Prior to June 21, 2021, Class C shares automatically converted to Class A shares after a holding period of ten years from the initial date of purchase, with certain exceptions.
2. Consolidated Subsidiary.
The Funds included in the table below hold certain commodity-related investments through a wholly owned subsidiary (the "Subsidiary"). As of period end, the investments in the Subsidiaries, were as follows:
Subsidiary Name | $ Amount | % of Fund's Net Assets | |
Gold Portfolio | Fidelity Select Gold Cayman Ltd. | 13,353,169 | .8 |
The financial statements have been consolidated to include the Subsidiary accounts where applicable. Accordingly, all inter-company transactions and balances have been eliminated.
3. Investments in Fidelity Central Funds.
Funds may 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 Consolidated Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
Based on its investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the investing fund. These strategies are consistent with the investment objectives of the investing fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the investing fund.
Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio(a) |
Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | Less than .005% |
(a) Expenses expressed as a percentage of average net assets and are as of each underlying Central Fund's most recent annual or semi-annual shareholder report.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which contain the significant accounting policies (including investment valuation policies) of those funds, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission website or upon request.
4. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies. 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 Fund's Consolidated Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. 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 – Unadjusted 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. 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, 2022 is included at the end of the Fund's Consolidated Schedule of Investments.
Foreign Currency. Certain 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 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 include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Consolidated Statement of Operations. 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. Large, non-recurring dividends recognized by the Fund are presented separately on the Consolidated Statement of Operations in "Non-cash dividends" and the impact of these dividends is presented in the Financial Highlights. 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 a 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 a fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred, as applicable. Certain expense reductions may also differ by class, if applicable. 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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. 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 certain Funds, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in affiliated mutual funds, are marked-to-market and remain in a fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees presented below are included in the accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, as applicable.
Gold Portfolio | $146,461 |
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, 2022, 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 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 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 corporations, deferred Trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes on a consolidated basis were as follows:
Gross unrealized appreciation | $589,410,467 |
Gross unrealized depreciation | (109,648,668) |
Net unrealized appreciation (depreciation) | $479,761,799 |
Tax Cost | $1,425,043,727 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $5,225,610 |
Capital loss carryforward | $(1,352,089,631) |
Net unrealized appreciation (depreciation) on securities and other investments | $479,801,018 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. 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 | $(199,931,688) |
Long-term | (1,152,157,943) |
Total capital loss carryforward | $(1,352,089,631) |
The tax character of distributions paid was as follows:
February 28, 2022 | February 28, 2021 | |
Ordinary Income | $27,126,849 | $ 91,091,449 |
Delayed Delivery Transactions and When-Issued Securities. During the period, certain Funds transacted in securities on a delayed delivery or when-issued basis. Payment and delivery may take place after the customary settlement period for that security. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. Securities purchased on a delayed delivery or when-issued basis are identified as such in the Consolidated Schedule of Investments. Compensation for interest forgone in the purchase of a delayed delivery or when-issued debt security may be received. With respect to purchase commitments, each applicable Fund identifies securities as segregated in its records with a value at least equal to the amount of the commitment. Payables and receivables associated with the purchases and sales of delayed delivery securities having the same coupon, settlement date and broker are offset. Delayed delivery or when-issued securities that have been purchased from and sold to different brokers are reflected as both payables and receivables in the Consolidated Statement of Assets and Liabilities under the caption "Delayed delivery", as applicable. Losses may arise due to changes in the value of the underlying securities or if the counterparty does not perform under the contract's terms, or if the issuer does not issue the securities due to political, economic, or other factors.
Restricted Securities (including Private Placements). 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 held at period end is included at the end of the Consolidated Schedule of Investments, if applicable.
5. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, as applicable, are noted in the table below.
Purchases ($) | Sales ($) | |
Gold Portfolio | 676,029,674 | 787,202,466 |
6. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company 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 .22% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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 .52% of the Fund's average net assets.
The investment adviser, either through itself or through an affiliate provides investment management related services to the Subsidiary. The Subsidiary does not pay the investment adviser a fee for these services. Under the management contract with the subsidiary, the investment adviser pays all other expenses of the Subsidiary, except custodian fees.
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 Company LLC (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% | $218,219 | $5,960 |
Class M | .25% | .25% | 134,412 | 250 |
Class C | .75% | .25% | 484,260 | 35,819 |
$836,891 | $42,029 |
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 M 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 M and Class C redemptions. The deferred sales charges are 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class M shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained by FDC | |
Class A | $47,939 |
Class M | 5,437 |
Class C(a) | 3,448 |
$56,824 |
(a) When 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 LLC (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, except for Class Z. FIIOC receives an asset-based fee of Class Z's average net assets. 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 | $206,271 | .24 |
Class M | 73,159 | .27 |
Class C | 90,665 | .19 |
Gold | 2,396,014 | .17 |
Class I | 257,001 | .17 |
Class Z | 45,886 | .04 |
$3,068,996 |
Accounting 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. For the period, the fees were equivalent to the following annual rates:
% of Average Net Assets | |
Gold Portfolio | .04 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 as follows:
Amount | |
Gold Portfolio | $6,753 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. 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 | |
Gold Portfolio | Borrower | $7,226,214 | .30% | $849 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
Gold Portfolio | 6,729,832 | 28,439,118 | 8,079,161 |
7. 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 Consolidated Statement of Operations, and are listed below. During the period, there were no borrowings on this line of credit.
Amount | |
Gold Portfolio | $3,232 |
8. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Consolidated Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the 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. Affiliated security lending activity, if any, was as follows:
Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
Gold Portfolio | $41,446 | $– | $– |
9. 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. Any open loans, including accrued interest, at period end are presented under the caption "Notes payable" in the Consolidated Statement of Assets and Liabilities, if applicable. Activity in this program during the period for which loans were outstanding was as follows:
Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
Gold Portfolio | $2,574,000 | .57% | $41 |
10. Expense Reductions.
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, custodian credits reduced the Fund's expenses by $397.
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of fund-level operating expenses in the amount of $41,123.
11. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Gold Portfolio | ||
Distributions to shareholders | ||
Class A | $1,159,197 | $4,010,639 |
Class M | 296,704 | 1,115,063 |
Class C | 340,514 | 2,524,863 |
Gold | 21,360,877 | 70,600,050 |
Class I | 2,173,450 | 7,213,998 |
Class Z | 1,796,107 | 5,626,836 |
Total | $27,126,849 | $91,091,449 |
12. Share Transactions.
Share transactions for each class were as follows and may contain in-kind transactions, automatic conversions between classes or exchanges between affiliated funds:
Shares | Shares | Dollars | Dollars | |
Year ended February 28, 2022 | Year ended February 28, 2021 | Year ended February 28, 2022 | Year ended February 28, 2021 | |
Gold Portfolio | ||||
Class A | ||||
Shares sold | 1,096,721 | 1,602,411 | $29,272,417 | $46,307,419 |
Reinvestment of distributions | 47,654 | 147,580 | 1,130,833 | 3,943,292 |
Shares redeemed | (1,270,387) | (1,311,852) | (33,037,200) | (36,279,681) |
Net increase (decrease) | (126,012) | 438,139 | $(2,633,950) | $13,971,030 |
Class M | ||||
Shares sold | 261,284 | 473,868 | $6,743,876 | $13,282,274 |
Reinvestment of distributions | 12,798 | 42,585 | 296,405 | 1,111,652 |
Shares redeemed | (292,712) | (402,439) | (7,361,263) | (10,890,832) |
Net increase (decrease) | (18,630) | 114,014 | $(320,982) | $3,503,094 |
Class C | ||||
Shares sold | 196,401 | 543,437 | $4,759,229 | $14,501,134 |
Reinvestment of distributions | 15,464 | 100,321 | 339,121 | 2,470,926 |
Shares redeemed | (732,472) | (956,996) | (17,728,207) | (23,855,420) |
Net increase (decrease) | (520,607) | (313,238) | $(12,629,857) | $(6,883,360) |
Gold | ||||
Shares sold | 15,683,398 | 34,425,719 | $428,540,719 | $1,017,936,027 |
Reinvestment of distributions | 836,569 | 2,470,762 | 20,495,942 | 67,701,953 |
Shares redeemed | (20,431,260) | (41,839,156) | (537,992,891) | (1,230,854,903) |
Net increase (decrease) | (3,911,293) | (4,942,675) | $(88,956,230) | $(145,216,923) |
Class I | ||||
Shares sold | 1,719,405 | 2,639,229 | $46,014,104 | $75,390,235 |
Reinvestment of distributions | 85,689 | 255,414 | 2,100,234 | 7,033,514 |
Shares redeemed | (1,696,668) | (2,555,501) | (45,357,188) | (72,639,886) |
Net increase (decrease) | 108,426 | 339,142 | $2,757,150 | $9,783,863 |
Class Z | ||||
Shares sold | 1,719,289 | 3,622,415 | $46,800,221 | $106,573,896 |
Reinvestment of distributions | 72,350 | 201,508 | 1,773,309 | 5,545,241 |
Shares redeemed | (1,969,124) | (3,857,752) | (53,134,514) | (107,861,971) |
Net increase (decrease) | (177,485) | (33,829) | $(4,560,984) | $4,257,166 |
13. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a fund. The risk of material loss from such claims is considered remote.
14. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Fund's performance.
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Class A (incl. 5.75% sales charge) | 11.81% | 7.30% | 7.15% |
Class M (incl. 3.50% sales charge) | 14.18% | 7.50% | 7.09% |
Class C (incl. contingent deferred sales charge) | 16.75% | 7.77% | 7.14% |
Materials Portfolio | 18.98% | 8.88% | 8.08% |
Class I | 18.97% | 8.89% | 8.09% |
Class Z | 19.14% | 9.00% | 8.15% |
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.
The initial offering of Class Z shares took place on October 2, 2018. Returns prior to October 2, 2018, are those of Class I.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Materials Portfolio, a class of the fund, on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789799075_740.jpg)
Period Ending Values | ||
$21,751 | Materials Portfolio | |
$39,037 | S&P 500® Index |
Materials Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Jody Simes: For the fiscal year ending February 28, 2022, the fund's share classes (excluding sales charges, if applicable) gained roughly 18% to 19%, outperforming the 16.84% gain of the MSCI U.S. IMI Materials 25/50 Linked Index, as well as the broad-based S&P 500® index. Versus the sector index, security selection was the primary contributor, especially in the commodity chemicals group. An overweighting and stock selection in fertilizers & agricultural chemicals and security selection in specialty chemicals also bolstered the fund's relative result. The biggest individual relative contributor was an overweight position in Olin (+70%). Olin was among our biggest holdings this period. The fund's non-index stake in Nutrien, a position we established this period, gained 42%. Another notable relative contributor was an overweighting in CF Industries Holdings (+84%). This period we added to our stake. In contrast, the biggest detractors from performance versus the sector index were an underweighting and stock picks in steel. Security selection in copper and an overweighting in construction materials also hurt relative performance. Our largest individual detractor versus the sector index was an out-of-index stake in Lundin Mining (-13%). We considerably reduced our position this period. Also hampering performance was our lighter-than-index stake in Nucor, which gained 124%. Nucor was not held at period end. Another notable relative detractor was our outsized stake in Cleveland-Cliffs (-5%), a position that was sold the past 12 months. Notable changes in positioning include increased exposure to the fertilizers & agricultural chemicals subindustry and a lower allocation to construction 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.
Note to shareholders: On April 1, 2022, Ashley Fernandes assumed co-management responsibilities for the fund, joining Jody Simes. The two will manage the fund together until December 31, 2022, at which point Jody Simes plans to retire and Ashley will become sole Portfolio Manager.Materials Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
Linde PLC | 10.4 |
Freeport-McMoRan, Inc. | 6.5 |
CF Industries Holdings, Inc. | 5.0 |
Sherwin-Williams Co. | 4.7 |
Newmont Corp. | 4.2 |
Air Products & Chemicals, Inc. | 3.7 |
Albemarle Corp. U.S. | 3.7 |
Ecolab, Inc. | 3.6 |
Corteva, Inc. | 3.6 |
Tronox Holdings PLC | 3.4 |
48.8 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Chemicals | 64.9% | |
Metals & Mining | 19.8% | |
Containers & Packaging | 7.9% | |
Construction Materials | 5.0% | |
Paper & Forest Products | 1.7% | |
All Others* | 0.7% |
* Includes short-term investments and net other assets (liabilities).
Materials Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 99.3% | |||
Shares | Value | ||
Chemicals - 64.9% | |||
Commodity Chemicals - 8.7% | |||
LyondellBasell Industries NV Class A | 254,400 | $24,735,312 | |
Olin Corp. | 708,900 | 36,515,439 | |
Tronox Holdings PLC | 1,937,003 | 39,321,161 | |
100,571,912 | |||
Diversified Chemicals - 1.1% | |||
Huntsman Corp. | 317,500 | 12,839,700 | |
Fertilizers & Agricultural Chemicals - 15.3% | |||
CF Industries Holdings, Inc. | 708,100 | 57,490,639 | |
Corteva, Inc. | 797,811 | 41,510,106 | |
FMC Corp. | 59,517 | 6,978,368 | |
Nutrien Ltd. | 387,200 | 33,300,727 | |
The Mosaic Co. | 608,800 | 31,919,384 | |
The Scotts Miracle-Gro Co. Class A (a) | 41,800 | 5,854,508 | |
177,053,732 | |||
Industrial Gases - 14.1% | |||
Air Products & Chemicals, Inc. | 179,800 | 42,486,740 | |
Linde PLC | 410,786 | 120,458,888 | |
162,945,628 | |||
Specialty Chemicals - 25.7% | |||
Albemarle Corp. U.S. | 215,800 | 42,273,062 | |
Ashland Global Holdings, Inc. (a) | 63,700 | 5,878,236 | |
DuPont de Nemours, Inc. | 498,917 | 38,601,208 | |
Eastman Chemical Co. | 73,600 | 8,719,392 | |
Ecolab, Inc. | 238,210 | 41,986,895 | |
Element Solutions, Inc. | 912,100 | 22,419,418 | |
International Flavors & Fragrances, Inc. | 236,415 | 31,443,195 | |
Livent Corp. (a)(b) | 394,897 | 9,299,824 | |
PPG Industries, Inc. | 188,100 | 25,101,945 | |
RPM International, Inc. | 124,500 | 10,528,965 | |
Sherwin-Williams Co. | 204,000 | 53,678,520 | |
Wacker Chemie AG | 39,200 | 6,073,260 | |
296,003,920 | |||
TOTAL CHEMICALS | 749,414,892 | ||
Construction Materials - 5.0% | |||
Construction Materials - 5.0% | |||
Martin Marietta Materials, Inc. | 64,600 | 24,509,240 | |
Summit Materials, Inc. (b) | 266,800 | 8,329,496 | |
Vulcan Materials Co. | 135,300 | 24,550,185 | |
57,388,921 | |||
Containers & Packaging - 7.9% | |||
Metal & Glass Containers - 5.5% | |||
Aptargroup, Inc. | 93,900 | 11,444,532 | |
Ball Corp. | 299,000 | 26,832,260 | |
Crown Holdings, Inc. | 202,959 | 24,896,981 | |
63,173,773 | |||
Paper Packaging - 2.4% | |||
Avery Dennison Corp. | 102,300 | 18,025,260 | |
Packaging Corp. of America | 70,400 | 10,362,176 | |
28,387,436 | |||
TOTAL CONTAINERS & PACKAGING | 91,561,209 | ||
Metals & Mining - 19.8% | |||
Aluminum - 2.0% | |||
Alcoa Corp. | 306,900 | 23,121,846 | |
Copper - 9.3% | |||
First Quantum Minerals Ltd. | 856,600 | 25,120,175 | |
Freeport-McMoRan, Inc. | 1,586,300 | 74,476,785 | |
Lundin Mining Corp. | 759,200 | 7,325,456 | |
106,922,416 | |||
Diversified Metals & Mining - 0.2% | |||
Compass Minerals International, Inc. (a) | 43,100 | 2,526,522 | |
Gold - 4.8% | |||
Newmont Corp. | 725,300 | 48,014,860 | |
Royal Gold, Inc. | 62,600 | 7,590,876 | |
55,605,736 | |||
Steel - 3.5% | |||
Commercial Metals Co. | 330,700 | 12,748,485 | |
Reliance Steel & Aluminum Co. | 107,900 | 20,594,873 | |
Steel Dynamics, Inc. | 102,400 | 7,227,392 | |
40,570,750 | |||
TOTAL METALS & MINING | 228,747,270 | ||
Paper & Forest Products - 1.7% | |||
Forest Products - 1.7% | |||
Louisiana-Pacific Corp. | 172,400 | 12,404,180 | |
West Fraser Timber Co. Ltd. (a) | 73,300 | 7,316,699 | |
19,720,879 | |||
TOTAL COMMON STOCKS | |||
(Cost $743,769,122) | 1,146,833,171 | ||
Money Market Funds - 1.9% | |||
Fidelity Cash Central Fund 0.07% (c) | 1,212,008 | 1,212,250 | |
Fidelity Securities Lending Cash Central Fund 0.07% (c)(d) | 20,125,143 | 20,127,155 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $21,339,405) | 21,339,405 | ||
TOTAL INVESTMENT IN SECURITIES - 101.2% | |||
(Cost $765,108,527) | 1,168,172,576 | ||
NET OTHER ASSETS (LIABILITIES) - (1.2)% | (13,748,837) | ||
NET ASSETS - 100% | $1,154,423,739 |
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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $13,784,731 | $507,733,289 | $520,305,770 | $6,766 | $-- | $-- | $1,212,250 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 6,640,430 | 151,350,454 | 137,863,729 | 12,029 | -- | -- | 20,127,155 | 0.1% |
Total | $20,425,161 | $659,083,743 | $658,169,499 | $18,795 | $-- | $-- | $21,339,405 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $1,146,833,171 | $1,140,759,911 | $6,073,260 | $-- |
Money Market Funds | 21,339,405 | 21,339,405 | -- | -- |
Total Investments in Securities: | $1,168,172,576 | $1,162,099,316 | $6,073,260 | $-- |
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 | 77.3% |
Ireland | 10.4% |
Canada | 6.3% |
United Kingdom | 3.4% |
Netherlands | 2.1% |
Others (Individually Less Than 1%) | 0.5% |
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, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $19,687,341) — See accompanying schedule: Unaffiliated issuers (cost $743,769,122) | $1,146,833,171 | |
Fidelity Central Funds (cost $21,339,405) | 21,339,405 | |
Total Investment in Securities (cost $765,108,527) | $1,168,172,576 | |
Foreign currency held at value (cost $20,226) | 20,317 | |
Receivable for investments sold | 5,946,163 | |
Receivable for fund shares sold | 1,054,416 | |
Dividends receivable | 1,120,446 | |
Distributions receivable from Fidelity Central Funds | 1,460 | |
Prepaid expenses | 7,984 | |
Other receivables | 198,537 | |
Total assets | 1,176,521,899 | |
Liabilities | ||
Payable for fund shares redeemed | $995,022 | |
Accrued management fee | 502,474 | |
Distribution and service plan fees payable | 62,102 | |
Other affiliated payables | 198,035 | |
Other payables and accrued expenses | 229,877 | |
Collateral on securities loaned | 20,110,650 | |
Total liabilities | 22,098,160 | |
Net Assets | $1,154,423,739 | |
Net Assets consist of: | ||
Paid in capital | $793,965,173 | |
Total accumulated earnings (loss) | 360,458,566 | |
Net Assets | $1,154,423,739 | |
Net Asset Value and Maximum Offering Price | ||
Class A: | ||
Net Asset Value and redemption price per share ($138,218,611 ÷ 1,346,091 shares)(a) | $102.68 | |
Maximum offering price per share (100/94.25 of $102.68) | $108.94 | |
Class M: | ||
Net Asset Value and redemption price per share ($37,100,042 ÷ 365,434 shares)(a) | $101.52 | |
Maximum offering price per share (100/96.50 of $101.52) | $105.20 | |
Class C: | ||
Net Asset Value and offering price per share ($21,260,872 ÷ 215,553 shares)(a) | $98.63 | |
Materials: | ||
Net Asset Value, offering price and redemption price per share ($645,773,122 ÷ 6,252,269 shares) | $103.29 | |
Class I: | ||
Net Asset Value, offering price and redemption price per share ($238,281,586 ÷ 2,311,807 shares) | $103.07 | |
Class Z: | ||
Net Asset Value, offering price and redemption price per share ($73,789,506 ÷ 716,956 shares) | $102.92 |
(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, 2022 | ||
Investment Income | ||
Dividends | $18,539,840 | |
Income from Fidelity Central Funds (including $12,029 from security lending) | 18,795 | |
Total income | 18,558,635 | |
Expenses | ||
Management fee | $6,531,166 | |
Transfer agent fees | 2,106,088 | |
Distribution and service plan fees | 727,664 | |
Accounting fees | 399,319 | |
Custodian fees and expenses | 19,020 | |
Independent trustees' fees and expenses | 4,335 | |
Registration fees | 160,789 | |
Audit | 49,691 | |
Legal | 1,390 | |
Interest | 475 | |
Miscellaneous | 7,435 | |
Total expenses before reductions | 10,007,372 | |
Expense reductions | (29,076) | |
Total expenses after reductions | 9,978,296 | |
Net investment income (loss) | 8,580,339 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 32,202,319 | |
Foreign currency transactions | (13,908) | |
Total net realized gain (loss) | 32,188,411 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | 129,785,751 | |
Assets and liabilities in foreign currencies | (21,854) | |
Total change in net unrealized appreciation (depreciation) | 129,763,897 | |
Net gain (loss) | 161,952,308 | |
Net increase (decrease) in net assets resulting from operations | $170,532,647 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $8,580,339 | $5,000,942 |
Net realized gain (loss) | 32,188,411 | 30,735,588 |
Change in net unrealized appreciation (depreciation) | 129,763,897 | 247,967,950 |
Net increase (decrease) in net assets resulting from operations | 170,532,647 | 283,704,480 |
Distributions to shareholders | (8,437,183) | (5,297,912) |
Share transactions - net increase (decrease) | 72,770,453 | (36,201,462) |
Total increase (decrease) in net assets | 234,865,917 | 242,205,106 |
Net Assets | ||
Beginning of period | 919,557,822 | 677,352,716 |
End of period | $1,154,423,739 | $919,557,822 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Materials Portfolio Class A
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $87.03 | $59.39 | $69.57 | $88.50 | $81.27 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .46 | .33 | .58 | .84 | .55 |
Net realized and unrealized gain (loss) | 15.77 | 27.72 | (10.10) | (12.01) | 11.18 |
Total from investment operations | 16.23 | 28.05 | (9.52) | (11.17) | 11.73 |
Distributions from net investment income | (.58) | (.41) | (.66) | (.67) | (.50) |
Distributions from net realized gain | – | – | – | (7.09) | (4.00) |
Total distributions | (.58) | (.41) | (.66) | (7.76) | (4.50) |
Net asset value, end of period | $102.68 | $87.03 | $59.39 | $69.57 | $88.50 |
Total ReturnD,E | 18.64% | 47.27% | (13.81)% | (12.59)% | 14.65% |
Ratios to Average Net AssetsC,F,G | |||||
Expenses before reductions | 1.03% | 1.08% | 1.08% | 1.06% | 1.07% |
Expenses net of fee waivers, if any | 1.03% | 1.08% | 1.08% | 1.06% | 1.07% |
Expenses net of all reductions | 1.03% | 1.08% | 1.07% | 1.05% | 1.06% |
Net investment income (loss) | .46% | .48% | .87% | 1.08% | .64% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $138,219 | $101,238 | $76,869 | $126,182 | $201,933 |
Portfolio turnover rateH | 43% | 36% | 69% | 77%I | 67% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
H Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Materials Portfolio Class M
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $86.14 | $58.84 | $68.98 | $87.79 | $80.66 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .20 | .14 | .39 | .61 | .30 |
Net realized and unrealized gain (loss) | 15.59 | 27.42 | (10.01) | (11.88) | 11.08 |
Total from investment operations | 15.79 | 27.56 | (9.62) | (11.27) | 11.38 |
Distributions from net investment income | (.41) | (.26) | (.52) | (.45) | (.25) |
Distributions from net realized gain | – | – | – | (7.09) | (4.00) |
Total distributions | (.41) | (.26) | (.52) | (7.54) | (4.25) |
Net asset value, end of period | $101.52 | $86.14 | $58.84 | $68.98 | $87.79 |
Total ReturnD,E | 18.32% | 46.86% | (14.05)% | (12.84)% | 14.30% |
Ratios to Average Net AssetsC,F,G | |||||
Expenses before reductions | 1.29% | 1.36% | 1.37% | 1.35% | 1.36% |
Expenses net of fee waivers, if any | 1.29% | 1.36% | 1.36% | 1.35% | 1.36% |
Expenses net of all reductions | 1.29% | 1.36% | 1.36% | 1.34% | 1.35% |
Net investment income (loss) | .20% | .21% | .58% | .79% | .35% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $37,100 | $24,768 | $19,423 | $27,436 | $40,107 |
Portfolio turnover rateH | 43% | 36% | 69% | 77%I | 67% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
H Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Materials Portfolio Class C
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $83.76 | $57.30 | $67.13 | $85.52 | $78.72 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | (.28) | (.18) | .08 | .25 | (.09) |
Net realized and unrealized gain (loss) | 15.15 | 26.64 | (9.76) | (11.50) | 10.80 |
Total from investment operations | 14.87 | 26.46 | (9.68) | (11.25) | 10.71 |
Distributions from net investment income | – | – | (.15) | (.04) | (.02) |
Distributions from net realized gain | – | – | – | (7.09) | (3.89) |
Total distributions | – | – | (.15) | (7.14)D | (3.91) |
Net asset value, end of period | $98.63 | $83.76 | $57.30 | $67.13 | $85.52 |
Total ReturnE,F | 17.75% | 46.18% | (14.46)% | (13.24)% | 13.78% |
Ratios to Average Net AssetsC,G,H | |||||
Expenses before reductions | 1.78% | 1.83% | 1.82% | 1.81% | 1.82% |
Expenses net of fee waivers, if any | 1.78% | 1.83% | 1.82% | 1.81% | 1.82% |
Expenses net of all reductions | 1.78% | 1.83% | 1.81% | 1.79% | 1.82% |
Net investment income (loss) | (.29)% | (.27)% | .12% | .33% | (.11)% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $21,261 | $23,296 | $24,239 | $51,659 | $85,792 |
Portfolio turnover rateI | 43% | 36% | 69% | 77%J | 67% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Total distributions per share do not sum due to rounding.
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 contingent deferred sales charge.
G Fees and expenses of any underlying mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Materials Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $87.46 | $59.63 | $69.84 | $88.90 | $81.64 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .75 | .53 | .77 | 1.06 | .79 |
Net realized and unrealized gain (loss) | 15.86 | 27.87 | (10.14) | (12.09) | 11.24 |
Total from investment operations | 16.61 | 28.40 | (9.37) | (11.03) | 12.03 |
Distributions from net investment income | (.78) | (.57) | (.84) | (.93) | (.77) |
Distributions from net realized gain | – | – | – | (7.09) | (4.00) |
Total distributions | (.78) | (.57) | (.84) | (8.03)D | (4.77) |
Net asset value, end of period | $103.29 | $87.46 | $59.63 | $69.84 | $88.90 |
Total ReturnE | 18.98% | 47.68% | (13.57)% | (12.35)% | 14.96% |
Ratios to Average Net AssetsC,F,G | |||||
Expenses before reductions | .75% | .80% | .80% | .79% | .79% |
Expenses net of fee waivers, if any | .74% | .80% | .80% | .79% | .79% |
Expenses net of all reductions | .74% | .80% | .79% | .78% | .79% |
Net investment income (loss) | .75% | .76% | 1.14% | 1.35% | .91% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $645,773 | $533,073 | $405,668 | $626,759 | $1,043,704 |
Portfolio turnover rateH | 43% | 36% | 69% | 77%I | 67% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
H Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
I Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Materials Portfolio Class I
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $87.29 | $59.52 | $69.70 | $88.73 | $81.49 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .74 | .55 | .78 | 1.07 | .80 |
Net realized and unrealized gain (loss) | 15.83 | 27.80 | (10.12) | (12.08) | 11.22 |
Total from investment operations | 16.57 | 28.35 | (9.34) | (11.01) | 12.02 |
Distributions from net investment income | (.79) | (.58) | (.84) | (.93) | (.78) |
Distributions from net realized gain | – | – | – | (7.09) | (4.00) |
Total distributions | (.79) | (.58) | (.84) | (8.02) | (4.78) |
Net asset value, end of period | $103.07 | $87.29 | $59.52 | $69.70 | $88.73 |
Total ReturnD | 18.97% | 47.70% | (13.55)% | (12.34)% | 14.97% |
Ratios to Average Net AssetsC,E,F | |||||
Expenses before reductions | .75% | .78% | .79% | .78% | .79% |
Expenses net of fee waivers, if any | .75% | .78% | .79% | .78% | .79% |
Expenses net of all reductions | .75% | .78% | .78% | .77% | .78% |
Net investment income (loss) | .74% | .78% | 1.16% | 1.36% | .92% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $238,282 | $190,132 | $137,887 | $254,240 | $511,062 |
Portfolio turnover rateG | 43% | 36% | 69% | 77%H | 67% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
F Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
G Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
H Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Materials Portfolio Class Z
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B |
Selected Per–Share Data | ||||
Net asset value, beginning of period | $87.14 | $59.40 | $69.58 | $79.81 |
Income from Investment Operations | ||||
Net investment income (loss)C,D | .88 | .67 | .88 | .62 |
Net realized and unrealized gain (loss) | 15.81 | 27.75 | (10.10) | (6.96) |
Total from investment operations | 16.69 | 28.42 | (9.22) | (6.34) |
Distributions from net investment income | (.91) | (.68) | (.96) | (.96) |
Distributions from net realized gain | – | – | – | (2.93) |
Total distributions | (.91) | (.68) | (.96) | (3.89) |
Net asset value, end of period | $102.92 | $87.14 | $59.40 | $69.58 |
Total ReturnE,F | 19.14% | 47.92% | (13.43)% | (7.35)% |
Ratios to Average Net AssetsD,G,H | ||||
Expenses before reductions | .62% | .64% | .63% | .63%I |
Expenses net of fee waivers, if any | .62% | .64% | .63% | .62%I |
Expenses net of all reductions | .62% | .63% | .62% | .61%I |
Net investment income (loss) | .88% | .93% | 1.31% | 2.27%I |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $73,790 | $47,051 | $13,267 | $10,039 |
Portfolio turnover rateJ | 43% | 36% | 69% | 77%K |
A For the year ended February 29.
B For the period October 2, 2018 (commencement of sale of shares) through February 28, 2019.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
E Total returns for periods of less than one year are not annualized.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Annualized
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
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, 2022
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 M, Class C, Materials, Class I and Class Z 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. Effective June 21, 2021, Class C shares will automatically convert to Class A shares after a holding period of eight years from the initial date of purchase, with certain exceptions. Prior to June 21, 2021, Class C shares automatically converted to Class A shares after a holding period of ten years from the initial date of purchase, with certain exceptions.
2. Investments in Fidelity Central Funds.
Funds may 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
Based on its investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the investing fund. These strategies are consistent with the investment objectives of the investing fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the investing fund.
Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio(a) |
Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | Less than .005% |
(a) Expenses expressed as a percentage of average net assets and are as of each underlying Central Fund's most recent annual or semi-annual shareholder report.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which contain the significant accounting policies (including investment valuation policies) of those funds, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies. 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 Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. 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 – Unadjusted 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. 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, 2022 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. Certain 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 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 include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of a 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 a fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred, as applicable. Certain expense reductions may also differ by class, if applicable. 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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. 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 certain Funds, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in affiliated mutual funds, are marked-to-market and remain in a fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees presented below are included in the accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, as applicable.
Materials Portfolio | $190,012 |
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, 2022, 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 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, deferred Trustees compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows:
Gross unrealized appreciation | $408,937,230 |
Gross unrealized depreciation | (7,545,278) |
Net unrealized appreciation (depreciation) | $401,391,952 |
Tax Cost | $766,780,624 |
The tax-based components of distributable earnings as of period end were as follows:
Capital loss carryforward | $(40,591,105) |
Net unrealized appreciation (depreciation) on securities and other investments | $401,375,081 |
Capital loss carryforwards are only available to offset future capital gains of the Fund to the extent provided by regulations and may be limited. 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 | $(40,591,105) |
The fund intends to elect to defer to its next fiscal year $147,768 of ordinary losses recognized during the period January 1, 2022 to February 28, 2022.
The tax character of distributions paid was as follows:
February 28, 2022 | February 28, 2021 | |
Ordinary Income | $8,437,183 | $ 5,297,912 |
Total | $8,437,183 | $ 5,297,912 |
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, as applicable, are noted in the table below.
Purchases ($) | Sales ($) | |
Materials Portfolio | 602,250,426 | 521,316,894 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company 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 .22% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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 .52% 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 Company LLC (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% | $325,411 | $9,700 |
Class M | .25% | .25% | 166,700 | 556 |
Class C | .75% | .25% | 235,553 | 52,945 |
$727,664 | $63,201 |
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 M 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 M and Class C redemptions. The deferred sales charges are 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class M shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained by FDC | |
Class A | $50,452 |
Class M | 5,694 |
Class C(a) | 647 |
$56,793 |
(a) When 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 LLC (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, except for Class Z. FIIOC receives an asset-based fee of Class Z's average net assets. 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 | $269,947 | .21 |
Class M | 71,480 | .22 |
Class C | 49,107 | .21 |
Materials | 1,251,677 | .17 |
Class I | 434,486 | .18 |
Class Z | 29,391 | .04 |
$2,106,088 |
Accounting 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. For the period, the fees were equivalent to the following annual rates:
% of Average Net Assets | |
Materials Portfolio | .03 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 | |
Materials Portfolio | $13,314 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. 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 | |
Materials Portfolio | Borrower | $11,137,800 | .31% | $475 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
Materials Portfolio | 24,317,527 | 19,085,140 | 749,241 |
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 listed below. During the period, there were no borrowings on this line of credit.
Amount | |
Materials Portfolio | $2,004 |
7. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the 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. Affiliated security lending activity, if any, was as follows:
Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
Materials Portfolio | $1,228 | $– | $– |
8. Expense Reductions.
During the period the investment adviser or an affiliate reimbursed and/or waived a portion of fund-level operating expenses in the amount of $29,076.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Materials Portfolio | ||
Distributions to shareholders | ||
Class A | $762,533 | $459,155 |
Class M | 147,448 | 75,042 |
Materials | 5,007,156 | 3,226,797 |
Class I | 1,869,092 | 1,194,642 |
Class Z | 650,954 | 342,276 |
Total | $8,437,183 | $5,297,912 |
10. Share Transactions.
Share transactions for each class were as follows and may contain in-kind transactions, automatic conversions between classes or exchanges between affiliated funds:
Shares | Shares | Dollars | Dollars | |
Year ended February 28, 2022 | Year ended February 28, 2021 | Year ended February 28, 2022 | Year ended February 28, 2021 | |
Materials Portfolio | ||||
Class A | ||||
Shares sold | 462,367 | 232,580 | $46,208,008 | $16,623,421 |
Reinvestment of distributions | 7,168 | 5,436 | 745,309 | 445,844 |
Shares redeemed | (286,710) | (369,056) | (28,650,346) | (24,644,731) |
Net increase (decrease) | 182,825 | (131,040) | $18,302,971 | $(7,575,466) |
Class M | ||||
Shares sold | 179,127 | 67,506 | $17,772,580 | $4,689,948 |
Reinvestment of distributions | 1,429 | 920 | 147,010 | 74,674 |
Shares redeemed | (102,671) | (110,988) | (10,013,298) | (7,406,306) |
Net increase (decrease) | 77,885 | (42,562) | $7,906,292 | $(2,641,684) |
Class C | ||||
Shares sold | 94,534 | 32,214 | $9,060,563 | $2,496,383 |
Shares redeemed | (157,099) | (177,084) | (14,767,417) | (11,686,701) |
Net increase (decrease) | (62,565) | (144,870) | $(5,706,854) | $(9,190,318) |
Materials | ||||
Shares sold | 5,001,453 | 1,230,906 | $502,734,189 | $96,760,419 |
Reinvestment of distributions | 44,769 | 36,660 | 4,680,116 | 3,019,633 |
Shares redeemed | (4,889,252) | (1,975,420) | (485,592,599) | (133,695,250) |
Net increase (decrease) | 156,970 | (707,854) | $21,821,706 | $(33,915,198) |
Class I | ||||
Shares sold | 1,335,457 | 1,182,584 | $132,303,721 | $83,979,012 |
Reinvestment of distributions | 16,505 | 13,454 | 1,721,641 | 1,106,042 |
Shares redeemed | (1,218,271) | (1,334,747) | (121,416,087) | (91,748,212) |
Net increase (decrease) | 133,691 | (138,709) | $12,609,275 | $(6,663,158) |
Class Z | ||||
Shares sold | 511,529 | 507,135 | $50,914,703 | $36,121,225 |
Reinvestment of distributions | 5,860 | 4,066 | 610,221 | 333,648 |
Shares redeemed | (340,358) | (194,628) | (33,687,861) | (12,670,511) |
Net increase (decrease) | 177,031 | 316,573 | $17,837,063 | $23,784,362 |
11. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a fund. The risk of material loss from such claims is considered remote.
12. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Fund's performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and Shareholders of Chemicals Portfolio, Gold Portfolio and Materials Portfolio.
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Chemicals Portfolio, Gold Portfolio and its subsidiary, and Materials Portfolio (three of the funds constituting Fidelity Select Portfolios, referred to hereafter as the “Funds”) as of February 28, 2022, the related statements of operations for the year ended February 28, 2022, the statements of changes in net assets for each of the two years in the period ended February 28, 2022, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of February 28, 2022, 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 ended February 28, 2022 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 28, 2022 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 opinions.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
April 12, 2022
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
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 317 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 if you’re an individual investing directly with Fidelity, call 1-800-835-5092 if you’re a plan sponsor or participant with Fidelity as your recordkeeper or call 1-877-208-0098 on institutional accounts or if you’re an advisor or invest through one.
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. Robert A. Lawrence is an interested person and currently serves as Acting 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. David M. Thomas serves as Lead Independent Trustee 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 high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the funds' Board. 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 FMR 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 FMR, 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, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. 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+
Bettina Doulton (1964)
Year of Election or Appointment: 2020
Trustee
Ms. Doulton also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Doulton served in a variety of positions at Fidelity Investments, including as a managing director of research (2006-2007), portfolio manager to certain Fidelity® funds (1993-2005), equity analyst and portfolio assistant (1990-1993), and research assistant (1987-1990). Ms. Doulton currently owns and operates Phi Builders + Architects and Cellardoor Winery. Previously, Ms. Doulton served as a member of the Board of Brown Capital Management, LLC (2014-2018).
Robert A. Lawrence (1952)
Year of Election or Appointment: 2020
Trustee
Acting Chairman of the Board of Trustees
Mr. Lawrence also serves as Trustee of other funds. Previously, Mr. Lawrence served as a Member of the Advisory Board of certain funds. Prior to his retirement in 2008, Mr. Lawrence served as Vice President of certain Fidelity® funds (2006-2008), Senior Vice President, Head of High Income Division of Fidelity Management & Research Company (investment adviser firm, 2006-2008), and President of Fidelity Strategic Investments (investment adviser firm, 2002-2005).
* 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 FMR.
+ 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+
Thomas P. Bostick (1956)
Year of Election or Appointment: 2021
Trustee
Lieutenant General Bostick also serves as Trustee of other Fidelity® funds. Prior to his retirement, General Bostick (United States Army, Retired) held a variety of positions within the U.S. Army, including Commanding General and Chief of Engineers, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff and Director of Human Resources, U.S. Army (2009-2012). General Bostick currently serves as a member of the Board and Finance and Governance Committees of CSX Corporation (transportation, 2020-present) and a member of the Board and Corporate Governance and Nominating Committee of Perma-Fix Environmental Services, Inc. (nuclear waste management, 2020-present). General Bostick serves as Chief Executive Officer of Bostick Global Strategies, LLC (consulting, 2016-present) and as a member of the Board of HireVue, Inc. (video interview and assessment, 2020-present). Previously, General Bostick served as a Member of the Advisory Board of certain Fidelity® funds (2021), President, Intrexon Bioengineering (2018-2020) and Chief Operating Officer (2017-2020) and Senior Vice President of the Environment Sector (2016-2017) of Intrexon Corporation (biopharmaceutical company).
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 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 currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York and a member of the Board of The Leadership Academy (previously NYC Leadership Academy) (2012-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Vicki L. Fuller (1957)
Year of Election or Appointment: 2020
Trustee
Ms. Fuller also serves as Trustee of other Fidelity® funds. Previously, Ms. Fuller served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of two Blackstone business development companies (2020-present), as a member of the Board of Treliant, LLC (consulting, 2019-present), as a member of the Advisory Board of Ariel Alternatives, LLC (private equity, 2021-present) and as a member of the Board and Chair of the Audit Committee of Gusto, Inc. (software, 2021-present). In addition, Ms. Fuller currently serves as a member of the Board of Roosevelt University (2019-present) and as a member of the Executive Board of New York University’s Stern School of Business. Ms. Fuller previously served as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-2021).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Trustee
Ms. Kampling also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Finance Committee and Governance, Compensation and Nominating Committee of Xcel Energy Inc. (utilities company, 2020-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee and Chair of the Executive Development and Compensation Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a Member of the Advisory Board of certain Fidelity® funds (2020), a member of the Board, Compensation Committee and Executive Committee and Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-2021), a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Thomas A. Kennedy (1955)
Year of Election or Appointment: 2021
Trustee
Mr. Kennedy also serves as Trustee of other Fidelity® funds. Previously, Mr. Kennedy served as a Member of the Advisory Board of certain Fidelity® funds (2020) and held a variety of positions at Raytheon Company (aerospace and defense, 1983-2020), including Chairman and Chief Executive Officer (2014-2020) and Executive Vice President and Chief Operating Officer (2013-2014). Mr. Kennedy currently serves as Executive Chairman of the Board of Directors of Raytheon Technologies Corporation (aerospace and defense, 2020-present). He is also a member of the Rutgers School of Engineering Industry Advisory Board (2011-present) and a member of the UCLA Engineering Dean’s Executive Board (2016-present).
Oscar Munoz (1959)
Year of Election or Appointment: 2021
Trustee
Mr. Munoz also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Munoz served as Executive Chairman (2020-2021), Chief Executive Officer (2015-2020), President (2015-2016) and a member of the Board (2010-2021) of United Airlines Holdings, Inc. Mr. Munoz currently serves as a member of the Board of CBRE Group, Inc. (commercial real estate, 2020-present), a member of the Board of Univision Communications, Inc. (Hispanic media, 2020-present) and a member of the Advisory Board of Salesforce.com, Inc. (cloud-based software, 2020-present). Previously, Mr. Munoz served as a Member of the Advisory Board of certain Fidelity® funds (2021).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Lead Independent Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as a member of the Board of Fortune Brands Home and Security (home and security products, 2004-present) and as Director (2013-present) and Non-Executive Chairman of the Board (2022-present) of Interpublic Group of Companies, Inc. (marketing communication).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Trustee
Ms. Tomasky also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Executive Committee, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present) and as a member of the Board of its subsidiary company, Public Service Electric and Gas Co. (2021-present). In addition, Ms. Tomasky currently serves as a member (2009-present) and President (2020-present) of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board and Kenyon in the World Committee of Kenyon College (2016-present). Previously, Ms. Tomasky served as a Member of the Advisory Board of certain Fidelity® funds (2020), as a member of the Board of the Columbus Regional Airport Authority (2007-2020), as a member of the Board (2011-2018) and Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee of other Fidelity® funds. Previously, Mr. Wiley served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley also previously served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018), a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018) and a member of the Board of High Point Resources (exploration and production, 2005-2020).
+ 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 (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as an officer of other funds. Mr. Brown serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
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 Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as an officer of other funds. Mr. Davis serves as Assistant Treasurer of FIMM, LLC (2021-present), FMR Capital, Inc. (2017-present), FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); 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).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2017-present). Previously, Ms. Del Prato served as President and Treasurer of The North Carolina Capital Management Trust: Cash Portfolio and Term Portfolio (2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present); Secretary of FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); and Assistant Secretary of FIMM, LLC (2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); 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).
Jason P. Pogorelec (1975)
Year of Election or Appointment: 2020
Chief Compliance Officer
Mr. Pogorelec also serves as Chief Compliance Officer of other funds. Mr. Pogorelec is a senior Vice President of Asset Management Compliance for Fidelity Investments and is an employee of Fidelity Investments (2006-present). Previously, Mr. Pogorelec served as Vice President, Associate General Counsel for Fidelity Investments (2010-2020) and Assistant Secretary of certain Fidelity funds (2015-2020).
Brett Segaloff (1972)
Year of Election or Appointment: 2021
Anti-Money Laundering (AML) Officer
Mr. Segaloff also serves as an AML Officer of other funds and other related entities. He is Director, Anti-Money Laundering (2007-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments (1996-present).
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), 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 Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as an officer of other funds. Mr. Wegmann serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2011-present). Previously, Mr. Wegmann served as Assistant Treasurer of certain Fidelity® funds (2019-2021).
Shareholder Expense Example
As a shareholder, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or redemption proceeds, as applicable and (2) ongoing costs, which generally include 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 a 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, 2021 to February 28, 2022).
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 for a class/Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If any fund is a shareholder of any underlying mutual funds or exchange-traded funds (ETFs) (the Underlying Funds), such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses incurred presented in the table. These fees and expenses are not included in the 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 actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the 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. If any fund is a shareholder of any Underlying Funds, such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses as presented in the table. These fees and expenses are not included in the 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, 2021 | Ending Account Value February 28, 2022 | Expenses Paid During Period-B September 1, 2021 to February 28, 2022 | |
Chemicals Portfolio | .73% | |||
Actual | $1,000.00 | $999.90 | $3.62 | |
Hypothetical-C | $1,000.00 | $1,021.17 | $3.66 | |
Gold Portfolio | ||||
Class A | 1.07% | |||
Actual | $1,000.00 | $1,017.70 | $5.35 | |
Hypothetical-C | $1,000.00 | $1,019.49 | $5.36 | |
Class M | 1.35% | |||
Actual | $1,000.00 | $1,016.70 | $6.75 | |
Hypothetical-C | $1,000.00 | $1,018.10 | $6.76 | |
Class C | 1.77% | |||
Actual | $1,000.00 | $1,014.30 | $8.84 | |
Hypothetical-C | $1,000.00 | $1,016.02 | $8.85 | |
Gold | .75% | |||
Actual | $1,000.00 | $1,019.20 | $3.75 | |
Hypothetical-C | $1,000.00 | $1,021.08 | $3.76 | |
Class I | .75% | |||
Actual | $1,000.00 | $1,019.50 | $3.76 | |
Hypothetical-C | $1,000.00 | $1,021.08 | $3.76 | |
Class Z | .62% | |||
Actual | $1,000.00 | $1,020.00 | $3.11 | |
Hypothetical-C | $1,000.00 | $1,021.72 | $3.11 | |
Materials Portfolio | ||||
Class A | 1.02% | |||
Actual | $1,000.00 | $1,027.70 | $5.13 | |
Hypothetical-C | $1,000.00 | $1,019.74 | $5.11 | |
Class M | 1.27% | |||
Actual | $1,000.00 | $1,026.30 | $6.38 | |
Hypothetical-C | $1,000.00 | $1,018.50 | $6.36 | |
Class C | 1.77% | |||
Actual | $1,000.00 | $1,023.80 | $8.88 | |
Hypothetical-C | $1,000.00 | $1,016.02 | $8.85 | |
Materials | .73% | |||
Actual | $1,000.00 | $1,029.10 | $3.67 | |
Hypothetical-C | $1,000.00 | $1,021.17 | $3.66 | |
Class I | .75% | |||
Actual | $1,000.00 | $1,029.10 | $3.77 | |
Hypothetical-C | $1,000.00 | $1,021.08 | $3.76 | |
Class Z | .61% | |||
Actual | $1,000.00 | $1,029.70 | $3.07 | |
Hypothetical-C | $1,000.00 | $1,021.77 | $3.06 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/ 365 (to reflect the one-half year period). The fees and expenses of any Underlying Funds are not included in each annualized expense ratio.
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 | 04/11/22 | 04/08/22 | $0.008 | $0.613 |
Gold Portfolio | ||||
Class A | 04/11/22 | 04/08/22 | $0.069 | $0.000 |
Class M | 04/11/22 | 04/08/22 | $0.059 | $0.000 |
Class C | 04/11/22 | 04/08/22 | $0.045 | $0.000 |
Gold | 04/11/22 | 04/08/22 | $0.081 | $0.000 |
Class I | 04/11/22 | 04/08/22 | $0.081 | $0.000 |
Class Z | 04/11/22 | 04/08/22 | $0.086 | $0.000 |
Materials Portfolio | ||||
Class A | 04/11/22 | 04/08/22 | $0.000 | $0.000 |
Class M | 04/11/22 | 04/08/22 | $0.000 | $0.000 |
Class C | 04/11/22 | 04/08/22 | $0.000 | $0.000 |
Materials | 04/11/22 | 04/08/22 | $0.000 | $0.000 |
Class I | 04/11/22 | 04/08/22 | $0.000 | $0.000 |
Class Z | 04/11/22 | 04/08/22 | $0.000 | $0.000 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2022, or, if subsequently determined to be different, the net capital gain of such year.
Chemicals Portfolio | $31,518,745 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
December 2021 | |
Chemicals Portfolio | 100% |
Gold Portfolio | |
Class A | 40% |
Class M | 48% |
Class C | 70% |
Gold | 34% |
Class I | 34% |
Class Z | 31% |
Materials Portfolio | |
Class A | 100% |
Class M | 100% |
Class C | – |
Materials | 100% |
Class I | 100% |
Class Z | 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.
December 2021 | |
Chemicals Portfolio | 100% |
Gold Portfolio | |
Class A | 100% |
Class M | 100% |
Class C | 100% |
Gold | 100% |
Class I | 100% |
Class Z | 100% |
Materials Portfolio | |
Class A | 100% |
Class M | 100% |
Class C | – |
Materials | 100% |
Class I | 100% |
Class Z | 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 | |||
Class A | 12/13/2021 | $0.3749 | $0.0279 |
Class M | 12/13/2021 | $0.3129 | $0.0279 |
Class C | 12/13/2021 | $0.2129 | $0.0279 |
Gold | 12/13/2021 | $0.4429 | $0.0279 |
Class I | 12/13/2021 | $0.4409 | $0.0279 |
Class Z | 12/13/2021 | $0.4729 | $0.0279 |
The funds will notify shareholders in January 2023 of amounts for use in preparing 2022 income tax returns.
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Funds have adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage each Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. Each Fund’s Board of Trustees (the Board) has designated each Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2020 through November 30, 2021. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
SELMT-ANN-0422
1.846032.115
Fidelity® Select Portfolios®
Telecommunications Services Sector
Telecommunications Portfolio
Wireless Portfolio
February 28, 2022
Includes Fidelity and Fidelity Advisor share classes
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Contents
Telecommunications Portfolio | |
Wireless Portfolio | |
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 if you’re an individual investing directly with Fidelity, call 1-800-835-5092 if you’re a plan sponsor or participant with Fidelity as your recordkeeper or call 1-877-208-0098 on institutional accounts or if you’re an advisor or invest through one to request a free copy of the proxy voting guidelines.
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All other marks appearing herein are registered or unregistered trademarks or service marks of FMR LLC or an affiliated company. © 2022 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-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT 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.
Note to Shareholders:
Early in 2020, the outbreak and spread of COVID-19 emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread. The pandemic prompted a number of measures to limit the spread of COVID-19, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. To help stem the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
In general, the overall impact of the pandemic lessened in 2021, amid a resilient economy and widespread distribution of three COVID-19 vaccines granted emergency use authorization from the U.S. Food and Drug Administration (FDA) early in the year. Still, the situation remains dynamic, and the extent and duration of its influence on financial markets and the economy is highly uncertain, due in part to a recent spike in cases based on highly contagious variants of the coronavirus.
Extreme events such as the COVID-19 crisis are exogenous shocks that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets. Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we continue to take extra steps to be responsive to customer needs. We encourage you to visit us online, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Class A (incl. 5.75% sales charge) | (11.67)% | 3.06% | 7.37% |
Class M (incl. 3.50% sales charge) | (9.82)% | 3.22% | 7.29% |
Class C (incl. contingent deferred sales charge) | (7.79)% | 3.53% | 7.39% |
Telecommunications Portfolio | (5.99)% | 4.63% | 8.37% |
Class I | (5.97)% | 4.62% | 8.35% |
Class Z | (5.87)% | 4.73% | 8.41% |
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.
The initial offering of Class Z shares took place on October 2, 2018. Returns prior to October 2, 2018, are those of Class I.
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Telecommunications Portfolio, a class of the fund, on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789797857_740.jpg)
Period Ending Values | ||
$22,332 | Telecommunications Portfolio | |
$39,037 | S&P 500® Index |
Telecommunications Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Nicole Abernethy: For the fiscal year ending February 28, 2022, the fund's share classes (excluding sales charges, if applicable) returned roughly -7% to -6%, roughly in line with the -5.96% result of the MSCI IMI Telecommunication Services 25/50 (IG) Index, but underperforming the benchmark, the broad-based S&P 500® index. Both security and market selection contributed to the fund’s relative return. Positioning in the integrated telecommunication services and cable & satellite segments contributed the most. Among individual stocks, underweighting alternative carrier Bandwidth.com (-81%), a benchmark component, contributed notably versus the index. It also helped to overweight Verizon Communications (+23%) and Vonage Holdings (+53%). The fund no longer held Vonage Holdings at period’s end. Conversely, an overweighting among application software firms detracted. Among individual stocks, an out-of-index stake in application software company RingCentral (-66%) detracted more than any other fund position. It also hurt to underweight alternative carrier Anterix (+26%). Notable changes in fund positioning for the 12 months included decreased exposure to the cable & satellite segment and a larger allocation to integrated telecommunication services firms.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, 2021, Nicole Abernethy became sole manager of the fund after having served as co-manager with Matt Drukker since August 2020.On October 1, 2021, Fidelity increased dividend distribution frequency for the fund because of its focus on industries that are associated with dividend-paying companies. Dividend distributions will be paid four times a year: April, July, October, and December. Quarterly dividend distributions will commence in April 2022. Please note that there are no changes to the frequency of capital gain distributions.
Telecommunications Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
Verizon Communications, Inc. | 24.9 |
AT&T, Inc. | 17.6 |
T-Mobile U.S., Inc. | 7.3 |
Iridium Communications, Inc. | 4.6 |
Liberty Global PLC Class C | 4.6 |
Cogent Communications Group, Inc. | 4.2 |
Liberty Latin America Ltd. Class C | 3.9 |
Telephone & Data Systems, Inc. | 3.8 |
Comcast Corp. Class A | 3.6 |
Liberty Broadband Corp. Class C | 3.3 |
77.8 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Diversified Telecommunication Services | 73.1% | |
Wireless Telecommunication Services | 16.1% | |
Media | 6.9% | |
IT Services | 0.8% | |
Software | 0.4% | |
All Others* | 2.7% |
* Includes short-term investments and net other assets (liabilities).
Telecommunications Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 98.1% | |||
Shares | Value | ||
Construction & Engineering - 0.4% | |||
Construction & Engineering - 0.4% | |||
Dycom Industries, Inc. (a) | 11,700 | $1,018,602 | |
Diversified Telecommunication Services - 73.1% | |||
Alternative Carriers - 25.6% | |||
Anterix, Inc. (a) | 87,700 | 4,672,656 | |
Bandwidth, Inc. (a)(b) | 83,700 | 2,557,035 | |
Cogent Communications Group, Inc. | 168,139 | 10,660,013 | |
EchoStar Holding Corp. Class A (a)(b) | 314,300 | 7,650,062 | |
Globalstar, Inc. (a)(b) | 1,100,200 | 1,298,236 | |
Iridium Communications, Inc. (a) | 294,211 | 11,647,813 | |
Liberty Global PLC Class C (a) | 448,536 | 11,603,626 | |
Liberty Latin America Ltd. Class C (a) | 981,033 | 9,898,623 | |
Lumen Technologies, Inc. (b) | 438,300 | 4,540,788 | |
64,528,852 | |||
Integrated Telecommunication Services - 47.5% | |||
AT&T, Inc. | 1,870,020 | 44,300,774 | |
ATN International, Inc. | 56,300 | 1,876,479 | |
Frontier Communications Parent, Inc. (a)(b) | 139,100 | 3,832,205 | |
Radius Global Infrastructure, Inc. (a) | 542,900 | 6,981,694 | |
Verizon Communications, Inc. | 1,169,297 | 62,756,171 | |
119,747,323 | |||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 184,276,175 | ||
Equity Real Estate Investment Trusts (REITs) - 0.2% | |||
Specialized REITs - 0.2% | |||
American Tower Corp. | 2,000 | 453,740 | |
IT Services - 0.8% | |||
Internet Services & Infrastructure - 0.3% | |||
Twilio, Inc. Class A (a) | 4,000 | 699,200 | |
IT Consulting & Other Services - 0.5% | |||
Amdocs Ltd. | 14,900 | 1,172,630 | |
TOTAL IT SERVICES | 1,871,830 | ||
Media - 6.9% | |||
Cable & Satellite - 6.9% | |||
Comcast Corp. Class A | 195,400 | 9,136,904 | |
Liberty Broadband Corp. Class C (a) | 56,924 | 8,350,751 | |
17,487,655 | |||
Oil, Gas & Consumable Fuels - 0.2% | |||
Oil & Gas Refining & Marketing - 0.2% | |||
Reliance Industries Ltd. | 17,500 | 546,767 | |
Software - 0.4% | |||
Application Software - 0.4% | |||
RingCentral, Inc. (a) | 8,500 | 1,112,140 | |
Wireless Telecommunication Services - 16.1% | |||
Wireless Telecommunication Services - 16.1% | |||
Gogo, Inc. (a)(b) | 490,400 | 6,983,296 | |
Millicom International Cellular SA (a)(b) | 44,300 | 1,029,089 | |
Shenandoah Telecommunications Co. (b) | 101,823 | 2,275,744 | |
T-Mobile U.S., Inc. (a) | 149,024 | 18,361,247 | |
Telephone & Data Systems, Inc. (b) | 555,964 | 9,645,975 | |
U.S. Cellular Corp. (a)(b) | 78,900 | 2,170,539 | |
40,465,890 | |||
TOTAL COMMON STOCKS | |||
(Cost $221,960,981) | 247,232,799 | ||
Money Market Funds - 11.9% | |||
Fidelity Cash Central Fund 0.07% (c) | 2,983,221 | 2,983,817 | |
Fidelity Securities Lending Cash Central Fund 0.07% (c)(d) | 27,077,128 | 27,079,836 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $30,063,653) | 30,063,653 | ||
TOTAL INVESTMENT IN SECURITIES - 110.0% | |||
(Cost $252,024,634) | 277,296,452 | ||
NET OTHER ASSETS (LIABILITIES) - (10.0)% | (25,100,928) | ||
NET ASSETS - 100% | $252,195,524 |
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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $2,585,116 | $71,679,371 | $71,280,670 | $1,058 | $-- | $-- | $2,983,817 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 6,843,676 | 162,460,118 | 142,223,958 | 12,309 | -- | -- | 27,079,836 | 0.1% |
Total | $9,428,792 | $234,139,489 | $213,504,628 | $13,367 | $-- | $-- | $30,063,653 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $247,232,799 | $247,232,799 | $-- | $-- |
Money Market Funds | 30,063,653 | 30,063,653 | -- | -- |
Total Investments in Securities: | $277,296,452 | $277,296,452 | $-- | $-- |
See accompanying notes which are an integral part of the financial statements.
Telecommunications Portfolio
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $26,890,466) — See accompanying schedule: Unaffiliated issuers (cost $221,960,981) | $247,232,799 | |
Fidelity Central Funds (cost $30,063,653) | 30,063,653 | |
Total Investment in Securities (cost $252,024,634) | $277,296,452 | |
Receivable for investments sold | 2,740,064 | |
Receivable for fund shares sold | 80,211 | |
Distributions receivable from Fidelity Central Funds | 2,676 | |
Prepaid expenses | 1,567 | |
Other receivables | 10,400 | |
Total assets | 280,131,370 | |
Liabilities | ||
Payable for fund shares redeemed | $605,786 | |
Accrued management fee | 114,629 | |
Distribution and service plan fees payable | 12,675 | |
Other affiliated payables | 50,371 | |
Other payables and accrued expenses | 73,025 | |
Collateral on securities loaned | 27,079,360 | |
Total liabilities | 27,935,846 | |
Net Assets | $252,195,524 | |
Net Assets consist of: | ||
Paid in capital | $220,327,969 | |
Total accumulated earnings (loss) | 31,867,555 | |
Net Assets | $252,195,524 | |
Net Asset Value and Maximum Offering Price | ||
Class A: | ||
Net Asset Value and redemption price per share ($22,022,795 ÷ 405,690 shares)(a) | $54.28 | |
Maximum offering price per share (100/94.25 of $54.28) | $57.59 | |
Class M: | ||
Net Asset Value and redemption price per share ($7,733,415 ÷ 143,528 shares)(a) | $53.88 | |
Maximum offering price per share (100/96.50 of $53.88) | $55.83 | |
Class C: | ||
Net Asset Value and offering price per share ($5,254,262 ÷ 97,224 shares)(a) | $54.04 | |
Telecommunications: | ||
Net Asset Value, offering price and redemption price per share ($199,559,990 ÷ 3,646,455 shares) | $54.73 | |
Class I: | ||
Net Asset Value, offering price and redemption price per share ($12,038,481 ÷ 220,571 shares) | $54.58 | |
Class Z: | ||
Net Asset Value, offering price and redemption price per share ($5,586,581 ÷ 102,578 shares) | $54.46 |
(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, 2022 | ||
Investment Income | ||
Dividends | $8,846,734 | |
Special dividends | 1,663,556 | |
Income from Fidelity Central Funds (including $12,309 from security lending) | 13,367 | |
Total income | 10,523,657 | |
Expenses | ||
Management fee | $1,641,892 | |
Transfer agent fees | 570,773 | |
Distribution and service plan fees | 189,402 | |
Accounting fees | 121,715 | |
Custodian fees and expenses | 4,170 | |
Independent trustees' fees and expenses | 1,186 | |
Registration fees | 90,147 | |
Audit | 55,243 | |
Legal | 898 | |
Interest | 190 | |
Miscellaneous | 1,837 | |
Total expenses before reductions | 2,677,453 | |
Expense reductions | (7,045) | |
Total expenses after reductions | 2,670,408 | |
Net investment income (loss) | 7,853,249 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of foreign taxes of $89,917) | 30,391,335 | |
Foreign currency transactions | (4,235) | |
Total net realized gain (loss) | 30,387,100 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of decrease in deferred foreign taxes of $102,805) | (51,298,734) | |
Assets and liabilities in foreign currencies | (110) | |
Total change in net unrealized appreciation (depreciation) | (51,298,844) | |
Net gain (loss) | (20,911,744) | |
Net increase (decrease) in net assets resulting from operations | $(13,058,495) |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $7,853,249 | $4,177,193 |
Net realized gain (loss) | 30,387,100 | 27,898,525 |
Change in net unrealized appreciation (depreciation) | (51,298,844) | 25,037,863 |
Net increase (decrease) in net assets resulting from operations | (13,058,495) | 57,113,581 |
Distributions to shareholders | (39,228,015) | (27,468,287) |
Share transactions - net increase (decrease) | (46,334,121) | 28,880,302 |
Total increase (decrease) in net assets | (98,620,631) | 58,525,596 |
Net Assets | ||
Beginning of period | 350,816,155 | 292,290,559 |
End of period | $252,195,524 | $350,816,155 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Telecommunications Portfolio Class A
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $66.52 | $60.60 | $55.68 | $55.58 | $69.61 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | 1.51D | .66 | .87 | 1.10E | 1.05 |
Net realized and unrealized gain (loss) | (5.14) | 10.61 | 5.86 | .56 | (3.38) |
Total from investment operations | (3.63) | 11.27 | 6.73 | 1.66 | (2.33) |
Distributions from net investment income | (1.66) | (.39) | (.96) | (.94) | (1.31) |
Distributions from net realized gain | (6.95) | (4.96) | (.85) | (.62) | (10.39) |
Total distributions | (8.61) | (5.35) | (1.81) | (1.56) | (11.70) |
Net asset value, end of period | $54.28 | $66.52 | $60.60 | $55.68 | $55.58 |
Total ReturnF,G | (6.28)% | 18.75% | 12.12% | 3.03% | (4.06)% |
Ratios to Average Net AssetsC,H,I | |||||
Expenses before reductions | 1.09% | 1.11% | 1.18% | 1.18% | 1.14% |
Expenses net of fee waivers, if any | 1.09% | 1.11% | 1.17% | 1.17% | 1.14% |
Expenses net of all reductions | 1.09% | 1.10% | 1.17% | 1.16% | 1.12% |
Net investment income (loss) | 2.27%D | 1.01% | 1.47% | 1.96%E | 1.59% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $22,023 | $29,800 | $21,376 | $20,589 | $17,816 |
Portfolio turnover rateJ | 28% | 58% | 58% | 64%K | 66% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.35 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.74%.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.25 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.52%.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Telecommunications Portfolio Class M
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $66.09 | $60.25 | $55.40 | $55.31 | $69.33 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | 1.29D | .46 | .70 | .92E | .81 |
Net realized and unrealized gain (loss) | (5.08) | 10.54 | 5.83 | .55 | (3.36) |
Total from investment operations | (3.79) | 11.00 | 6.53 | 1.47 | (2.55) |
Distributions from net investment income | (1.48) | (.20) | (.83) | (.76) | (1.07) |
Distributions from net realized gain | (6.95) | (4.96) | (.85) | (.62) | (10.39) |
Total distributions | (8.42)F | (5.16) | (1.68) | (1.38) | (11.47)F |
Net asset value, end of period | $53.88 | $66.09 | $60.25 | $55.40 | $55.31 |
Total ReturnG,H | (6.55)% | 18.39% | 11.81% | 2.69% | (4.40)% |
Ratios to Average Net AssetsC,I,J | |||||
Expenses before reductions | 1.39% | 1.41% | 1.46% | 1.50% | 1.49% |
Expenses net of fee waivers, if any | 1.38% | 1.41% | 1.46% | 1.49% | 1.49% |
Expenses net of all reductions | 1.38% | 1.40% | 1.45% | 1.48% | 1.48% |
Net investment income (loss) | 1.97%D | .71% | 1.19% | 1.64%E | 1.24% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $7,733 | $9,038 | $6,919 | $6,018 | $4,847 |
Portfolio turnover rateK | 28% | 58% | 58% | 64%L | 66% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.35 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.44%.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.25 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.19%.
F Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
K Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
L Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Telecommunications Portfolio Class C
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $66.17 | $60.32 | $55.45 | $55.29 | $69.24 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | 1.01D | .17 | .46 | .70E | .57 |
Net realized and unrealized gain (loss) | (5.09) | 10.54 | 5.82 | .56 | (3.36) |
Total from investment operations | (4.08) | 10.71 | 6.28 | 1.26 | (2.79) |
Distributions from net investment income | (1.10) | (.07) | (.56) | (.48) | (.77) |
Distributions from net realized gain | (6.95) | (4.79) | (.85) | (.62) | (10.39) |
Total distributions | (8.05) | (4.86) | (1.41) | (1.10) | (11.16) |
Net asset value, end of period | $54.04 | $66.17 | $60.32 | $55.45 | $55.29 |
Total ReturnF,G | (6.97)% | 17.88% | 11.34% | 2.30% | (4.75)% |
Ratios to Average Net AssetsC,H,I | |||||
Expenses before reductions | 1.83% | 1.86% | 1.88% | 1.88% | 1.86% |
Expenses net of fee waivers, if any | 1.83% | 1.86% | 1.87% | 1.88% | 1.86% |
Expenses net of all reductions | 1.83% | 1.84% | 1.87% | 1.86% | 1.85% |
Net investment income (loss) | 1.52%D | .26% | .77% | 1.26%E | .87% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $5,254 | $7,801 | $6,491 | $6,994 | $8,396 |
Portfolio turnover rateJ | 28% | 58% | 58% | 64%K | 66% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.35 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .99%.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.25 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .81%.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Telecommunications Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $67.04 | $60.99 | $56.04 | $55.88 | $69.97 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | 1.71D | .86 | 1.09 | 1.30E | 1.28 |
Net realized and unrealized gain (loss) | (5.18) | 10.71 | 5.90 | .56 | (3.42) |
Total from investment operations | (3.47) | 11.57 | 6.99 | 1.86 | (2.14) |
Distributions from net investment income | (1.89) | (.57) | (1.19) | (1.08) | (1.56) |
Distributions from net realized gain | (6.95) | (4.96) | (.85) | (.62) | (10.39) |
Total distributions | (8.84) | (5.52)F | (2.04) | (1.70) | (11.95) |
Net asset value, end of period | $54.73 | $67.04 | $60.99 | $56.04 | $55.88 |
Total ReturnG | (5.99)% | 19.15% | 12.50% | 3.38% | (3.76)% |
Ratios to Average Net AssetsC,H,I | |||||
Expenses before reductions | .79% | .81% | .83% | .84% | .82% |
Expenses net of fee waivers, if any | .79% | .81% | .82% | .83% | .82% |
Expenses net of all reductions | .79% | .79% | .82% | .82% | .80% |
Net investment income (loss) | 2.57%D | 1.31% | 1.82% | 2.30%E | 1.92% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $199,560 | $242,284 | $219,854 | $227,438 | $320,908 |
Portfolio turnover rateJ | 28% | 58% | 58% | 64%K | 66% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.35 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 2.04%.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.25 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.85%.
F Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Telecommunications Portfolio Class I
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $66.84 | $60.86 | $55.84 | $55.74 | $69.82 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | 1.74D | .88 | 1.04 | 1.27E | 1.26 |
Net realized and unrealized gain (loss) | (5.18) | 10.66 | 5.91 | .57 | (3.39) |
Total from investment operations | (3.44) | 11.54 | 6.95 | 1.84 | (2.13) |
Distributions from net investment income | (1.87) | (.60) | (1.08) | (1.12) | (1.56) |
Distributions from net realized gain | (6.95) | (4.96) | (.85) | (.62) | (10.39) |
Total distributions | (8.82) | (5.56) | (1.93) | (1.74) | (11.95) |
Net asset value, end of period | $54.58 | $66.84 | $60.86 | $55.84 | $55.74 |
Total ReturnF | (5.97)% | 19.13% | 12.47% | 3.35% | (3.75)% |
Ratios to Average Net AssetsC,G,H | |||||
Expenses before reductions | .77% | .79% | .88% | .91% | .82% |
Expenses net of fee waivers, if any | .77% | .79% | .88% | .90% | .82% |
Expenses net of all reductions | .77% | .78% | .88% | .88% | .80% |
Net investment income (loss) | 2.59%D | 1.33% | 1.76% | 2.23%E | 1.91% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $12,038 | $30,622 | $12,428 | $25,181 | $8,332 |
Portfolio turnover rateI | 28% | 58% | 58% | 64%J | 66% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.36 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 2.06%.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.25 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.79%.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Telecommunications Portfolio Class Z
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B |
Selected Per–Share Data | ||||
Net asset value, beginning of period | $66.75 | $60.75 | $55.84 | $60.97 |
Income from Investment Operations | ||||
Net investment income (loss)C,D | 1.83E | .95 | 1.20 | .39F |
Net realized and unrealized gain (loss) | (5.20) | 10.67 | 5.86 | (4.55) |
Total from investment operations | (3.37) | 11.62 | 7.06 | (4.16) |
Distributions from net investment income | (1.98) | (.67) | (1.30) | (.97) |
Distributions from net realized gain | (6.95) | (4.96) | (.85) | – |
Total distributions | (8.92)G | (5.62)G | (2.15) | (.97) |
Net asset value, end of period | $54.46 | $66.75 | $60.75 | $55.84 |
Total ReturnH,I | (5.87)% | 19.31% | 12.68% | (6.80)% |
Ratios to Average Net AssetsD,J,K | ||||
Expenses before reductions | .65% | .67% | .68% | .68%L |
Expenses net of fee waivers, if any | .65% | .67% | .67% | .66%L |
Expenses net of all reductions | .65% | .65% | .67% | .64%L |
Net investment income (loss) | 2.71%E | 1.45% | 1.97% | 1.67%F,L |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $5,587 | $31,271 | $25,223 | $383 |
Portfolio turnover rateM | 28% | 58% | 58% | 64%L,N |
A For the year ended February 29.
B For the period October 2, 2018 (commencement of sale of shares) through February 28, 2019.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.36 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 2.17%.
F Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.10 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.23%.
G Total distributions per share do not sum due to rounding.
H Total returns for periods of less than one year are not annualized.
I Total returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
J Fees and expenses of any underlying mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
K Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
L Annualized
M Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
N 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, 2022
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 M, Class C, Telecommunications, Class I and Class Z 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. Effective June 21, 2021, Class C shares will automatically convert to Class A shares after a holding period of eight years from the initial date of purchase, with certain exceptions. Prior to June 21, 2021, Class C shares automatically converted to Class A shares after a holding period of ten years from the initial date of purchase, with certain exceptions.
2. Investments in Fidelity Central Funds.
Funds may 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
Based on its investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the investing fund. These strategies are consistent with the investment objectives of the investing fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the investing fund.
Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio(a) |
Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | Less than .005% |
(a) Expenses expressed as a percentage of average net assets and are as of each underlying Central Fund's most recent annual or semi-annual shareholder report.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which contain the significant accounting policies (including investment valuation policies) of those funds, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies. 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 Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. 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 – Unadjusted 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. 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, 2022 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. Certain 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 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 include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. 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. Investment income is recorded net of foreign taxes withheld where recovery of such taxes is uncertain. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of a 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 a fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred, as applicable. Certain expense reductions may also differ by class, if applicable. 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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. 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, 2022, 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 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, certain foreign taxes and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows:
Gross unrealized appreciation | $52,893,115 |
Gross unrealized depreciation | (28,606,389) |
Net unrealized appreciation (depreciation) | $24,286,726 |
Tax Cost | $253,009,726 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $993,204 |
Undistributed long-term capital gain | $7,232,272 |
Net unrealized appreciation (depreciation) on securities and other investments | $24,282,630 |
The Fund intends to elect to defer to its next fiscal year $606,780 of capital losses recognized during the period November 1, 2021 to February 28, 2022.
The tax character of distributions paid was as follows:
February 28, 2022 | February 28, 2021 | |
Ordinary Income | $10,889,499 | $ 17,358,721 |
Long-term Capital Gains | 28,338,516 | 10,109,566 |
Total | $39,228,015 | $ 27,468,287 |
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, as applicable, are noted in the table below.
Purchases ($) | Sales ($) | |
Telecommunications Portfolio | 86,289,880 | 159,900,268 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company 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 .22% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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 .52% 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 Company LLC (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% | $72,705 | $1,451 |
Class M | .25% | .25% | 46,248 | 44 |
Class C | .75% | .25% | 70,449 | 9,868 |
$189,402 | $11,363 |
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 M 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 M and Class C redemptions. The deferred sales charges are 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class M shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained by FDC | |
Class A | $11,165 |
Class M | 1,439 |
Class C(a) | 401 |
$13,005 |
(a) When 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 LLC (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, except for Class Z. FIIOC receives an asset-based fee of Class Z's average net assets. 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 | $66,278 | .23 |
Class M | 25,534 | .28 |
Class C | 15,924 | .23 |
Telecommunications | 429,439 | .18 |
Class I | 29,358 | .16 |
Class Z | 4,240 | .04 |
$570,773 |
Accounting 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. For the period, the fees were equivalent to the following annual rates:
% of Average Net Assets | |
Telecommunications Portfolio | .04 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 | |
Telecommunications Portfolio | $7,981 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. 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 | |
Telecommunications Portfolio | Borrower | $7,875,000 | .29% | $190 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
Telecommunications Portfolio | 1,860,765 | 3,594,971 | (6,555) |
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 listed below. During the period, there were no borrowings on this line of credit.
Amount | |
Telecommunications Portfolio | $570 |
7. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the 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. Affiliated security lending activity, if any, was as follows:
Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
Telecommunications Portfolio | $1,262 | $1 | $– |
8. Expense Reductions.
During the period the investment adviser or an affiliate reimbursed and/or waived a portion of fund-level operating expenses in the amount of $7,045.
9. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Telecommunications Portfolio | ||
Distributions to shareholders | ||
Class A | $3,450,435 | $2,060,688 |
Class M | 1,137,728 | 618,358 |
Class C | 810,598 | 543,576 |
Telecommunications | 30,567,586 | 19,537,940 |
Class I | 2,148,608 | 2,189,998 |
Class Z | 1,113,060 | 2,517,727 |
Total | $39,228,015 | $27,468,287 |
10. Share Transactions.
Share transactions for each class were as follows and may contain in-kind transactions, automatic conversions between classes or exchanges between affiliated funds:
Shares | Shares | Dollars | Dollars | |
Year ended February 28, 2022 | Year ended February 28, 2021 | Year ended February 28, 2022 | Year ended February 28, 2021 | |
Telecommunications Portfolio | ||||
Class A | ||||
Shares sold | 90,188 | 237,010 | $6,068,619 | $15,495,311 |
Reinvestment of distributions | 54,998 | 28,925 | 3,273,159 | 1,927,122 |
Shares redeemed | (187,477) | (170,717) | (12,278,980) | (10,895,362) |
Net increase (decrease) | (42,291) | 95,218 | $(2,937,202) | $6,527,071 |
Class M | ||||
Shares sold | 30,229 | 67,415 | $1,999,078 | $4,343,394 |
Reinvestment of distributions | 19,272 | 9,283 | 1,135,663 | 615,502 |
Shares redeemed | (42,731) | (54,788) | (2,753,637) | (3,462,804) |
Net increase (decrease) | 6,770 | 21,910 | $381,104 | $1,496,092 |
Class C | ||||
Shares sold | 11,499 | 46,003 | $770,363 | $2,905,117 |
Reinvestment of distributions | 13,391 | 8,022 | 796,726 | 531,076 |
Shares redeemed | (45,557) | (43,758) | (2,968,982) | (2,786,911) |
Net increase (decrease) | (20,667) | 10,267 | $(1,401,893) | $649,282 |
Telecommunications | ||||
Shares sold | 360,254 | 1,081,282 | $23,554,030 | $67,328,134 |
Reinvestment of distributions | 475,371 | 273,796 | 28,443,914 | 18,231,068 |
Shares redeemed | (803,327) | (1,345,550) | (52,542,566) | (84,870,427) |
Net increase (decrease) | 32,298 | 9,528 | $(544,622) | $688,775 |
Class I | ||||
Shares sold | 96,788 | 484,027 | $6,174,851 | $30,288,296 |
Reinvestment of distributions | 32,650 | 30,580 | 1,972,758 | 2,061,536 |
Shares redeemed | (367,007) | (260,669) | (24,500,148) | (16,122,830) |
Net increase (decrease) | (237,569) | 253,938 | $(16,352,539) | $16,227,002 |
Class Z | ||||
Shares sold | 57,644 | 150,655 | $3,735,025 | $9,378,903 |
Reinvestment of distributions | 12,790 | 25,742 | 768,028 | 1,706,940 |
Shares redeemed | (436,350) | (123,085) | (29,982,022) | (7,793,763) |
Net increase (decrease) | (365,916) | 53,312 | $(25,478,969) | $3,292,080 |
11. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a fund. The risk of material loss from such claims is considered remote.
12. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Fund's performance.
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Wireless Portfolio | 4.40% | 15.47% | 13.16% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Wireless Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789799684_740.jpg)
Period Ending Values | ||
$34,438 | Wireless Portfolio | |
$39,037 | S&P 500® Index |
Wireless Portfolio
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Matthew Drukker: For the fiscal year ending February 28, 2022, the fund gained 4.40%, trailing the 10.51% advance of the Fidelity Wireless Index, as well as the benchmark, the broad-based S&P 500® index. Security selection significantly detracted from the fund’s relative performance versus the industry index, whereas sector selection added slight value. Stock picks and an underweighting in technology hardware, storage & peripherals detracted the most from the fund’s performance versus the Fidelity index. Security selection in trucking and application software also hampered the fund's relative result. Looking at individual stocks, a non-index stake in Meta Platforms (-19%) detracted the most versus industry the index. I reduced the fund’s Meta Platforms stake for the 12 months. Elsewhere, it hurt to underweight consumer electronics company Apple (+37%) and overweight application software provider RingCentral (-65%). In contrast, security selection in semiconductors and underweightings in integrated telecommunication services and systems software detracted. Among individual stocks, not owning index component Skyworks Solutions, an index component that returned -21%, contributed. It also helped to own a non-index stake in Bezeq, the Israeli Telecom (+71%), a position not held at period end. Notable changes in fund positioning the past 12 months included increased exposure to the specialized real estate investment trust (REIT) subindustry and a lower allocation to integrated telecommunication 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.
Wireless Portfolio
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
Apple, Inc. | 15.1 |
T-Mobile U.S., Inc. | 8.3 |
American Tower Corp. | 7.9 |
AT&T, Inc. | 6.1 |
Qualcomm, Inc. | 6.0 |
Marvell Technology, Inc. | 5.7 |
Verizon Communications, Inc. | 2.9 |
Amazon.com, Inc. | 2.7 |
Alphabet, Inc. Class A | 2.5 |
Liberty Global PLC Class A | 2.5 |
59.7 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Diversified Telecommunication Services | 17.7% | |
Technology Hardware, Storage & Peripherals | 16.7% | |
Semiconductors & Semiconductor Equipment | 15.8% | |
Wireless Telecommunication Services | 12.8% | |
Equity Real Estate Investment Trusts (Reits) | 10.8% | |
All Others* | 26.2% |
* Includes short-term investments and net other assets (liabilities).
Wireless Portfolio
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 100.1% | |||
Shares | Value | ||
Communications Equipment - 8.1% | |||
Communications Equipment - 8.1% | |||
CommScope Holding Co., Inc. (a) | 256,500 | $2,447,010 | |
Ericsson: | |||
(B Shares) | 172,600 | 1,588,248 | |
(B Shares) sponsored ADR | 1,017,400 | 9,441,472 | |
Motorola Solutions, Inc. | 35,368 | 7,796,168 | |
Nokia Corp. sponsored ADR (a) | 1,602,500 | 8,573,375 | |
ViaSat, Inc. (a)(b) | 65,501 | 2,989,466 | |
32,835,739 | |||
Diversified Telecommunication Services - 17.7% | |||
Alternative Carriers - 3.7% | |||
Iridium Communications, Inc. (a) | 68,200 | 2,700,038 | |
Liberty Global PLC Class A (a) | 387,500 | 9,989,750 | |
Liberty Latin America Ltd. Class C (a) | 228,900 | 2,309,601 | |
14,999,389 | |||
Integrated Telecommunication Services - 14.0% | |||
AT&T, Inc. | 1,041,000 | 24,661,290 | |
Cellnex Telecom SA (c) | 84,115 | 3,804,710 | |
Elisa Corp. (A Shares) | 57,400 | 3,180,372 | |
Orange SA ADR (b) | 799,400 | 9,656,752 | |
Telefonica SA sponsored ADR (b) | 695,249 | 3,267,670 | |
Verizon Communications, Inc. | 220,301 | 11,823,555 | |
56,394,349 | |||
TOTAL DIVERSIFIED TELECOMMUNICATION SERVICES | 71,393,738 | ||
Entertainment - 3.4% | |||
Interactive Home Entertainment - 3.0% | |||
Activision Blizzard, Inc. | 90,900 | 7,408,350 | |
Zynga, Inc. (a) | 530,000 | 4,812,400 | |
12,220,750 | |||
Movies & Entertainment - 0.4% | |||
Spotify Technology SA (a) | 10,200 | 1,593,138 | |
TOTAL ENTERTAINMENT | 13,813,888 | ||
Equity Real Estate Investment Trusts (REITs) - 10.8% | |||
Specialized REITs - 10.8% | |||
American Tower Corp. | 141,392 | 32,077,603 | |
Crown Castle International Corp. | 13,301 | 2,215,814 | |
SBA Communications Corp. Class A | 30,500 | 9,253,395 | |
43,546,812 | |||
Interactive Media & Services - 5.5% | |||
Interactive Media & Services - 5.5% | |||
Alphabet, Inc. Class A (a) | 3,700 | 9,994,218 | |
Meta Platforms, Inc. Class A (a) | 17,900 | 3,777,437 | |
Snap, Inc. Class A (a) | 196,900 | 7,864,186 | |
Vimeo, Inc. (a) | 32,321 | 419,850 | |
22,055,691 | |||
Internet & Direct Marketing Retail - 2.7% | |||
Internet & Direct Marketing Retail - 2.7% | |||
Amazon.com, Inc. (a) | 3,500 | 10,749,410 | |
IT Services - 0.5% | |||
Internet Services & Infrastructure - 0.5% | |||
Twilio, Inc. Class A (a) | 11,100 | 1,940,280 | |
Media - 0.8% | |||
Cable & Satellite - 0.8% | |||
DISH Network Corp. Class A (a) | 106,649 | 3,408,502 | |
Oil, Gas & Consumable Fuels - 1.9% | |||
Oil & Gas Refining & Marketing - 1.9% | |||
Reliance Industries Ltd. | 243,900 | 7,620,371 | |
Road & Rail - 1.9% | |||
Trucking - 1.9% | |||
Uber Technologies, Inc. (a) | 212,300 | 7,649,169 | |
Semiconductors & Semiconductor Equipment - 15.8% | |||
Semiconductor Equipment - 0.9% | |||
Teradyne, Inc. | 29,400 | 3,466,848 | |
Semiconductors - 14.9% | |||
Marvell Technology, Inc. | 336,800 | 23,013,544 | |
NXP Semiconductors NV | 28,900 | 5,494,468 | |
Qorvo, Inc. (a) | 54,100 | 7,399,798 | |
Qualcomm, Inc. | 141,150 | 24,276,389 | |
60,184,199 | |||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 63,651,047 | ||
Software - 1.5% | |||
Application Software - 1.5% | |||
LivePerson, Inc. (a) | 84,000 | 1,703,520 | |
RingCentral, Inc. (a) | 33,900 | 4,435,476 | |
Zoom Video Communications, Inc. Class A (a) | 300 | 39,780 | |
6,178,776 | |||
Technology Hardware, Storage & Peripherals - 16.7% | |||
Technology Hardware, Storage & Peripherals - 16.7% | |||
Apple, Inc. | 368,620 | 60,866,534 | |
Samsung Electronics Co. Ltd. | 110,100 | 6,634,589 | |
67,501,123 | |||
Wireless Telecommunication Services - 12.8% | |||
Wireless Telecommunication Services - 12.8% | |||
Bharti Airtel Ltd. (a) | 570,900 | 5,189,622 | |
Bharti Airtel Ltd. (a) | 47,900 | 208,197 | |
Millicom International Cellular SA (a)(b) | 113,400 | 2,634,282 | |
Rogers Communications, Inc. Class B (non-vtg.) | 88,900 | 4,593,342 | |
Shenandoah Telecommunications Co. | 300 | 6,705 | |
Spok Holdings, Inc. | 1 | 9 | |
T-Mobile U.S., Inc. (a) | 271,916 | 33,502,770 | |
Vodafone Group PLC sponsored ADR | 313,081 | 5,541,534 | |
51,676,461 | |||
TOTAL COMMON STOCKS | |||
(Cost $275,306,131) | 404,021,007 | ||
Money Market Funds - 2.9% | |||
Fidelity Cash Central Fund 0.07% (d) | 678,251 | 678,387 | |
Fidelity Securities Lending Cash Central Fund 0.07% (d)(e) | 11,172,238 | 11,173,355 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $11,851,742) | 11,851,742 | ||
TOTAL INVESTMENT IN SECURITIES - 103.0% | |||
(Cost $287,157,873) | 415,872,749 | ||
NET OTHER ASSETS (LIABILITIES) - (3.0)% | (12,306,573) | ||
NET ASSETS - 100% | $403,566,176 |
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 $3,804,710 or 0.9% 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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $4,131,250 | $85,933,646 | $89,386,509 | $1,045 | $-- | $-- | $678,387 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 16,980,003 | 193,806,501 | 199,613,149 | 63,060 | -- | -- | 11,173,355 | 0.0% |
Total | $21,111,253 | $279,740,147 | $288,999,658 | $64,105 | $-- | $-- | $11,851,742 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $404,021,007 | $388,813,088 | $15,207,919 | $-- |
Money Market Funds | 11,851,742 | 11,851,742 | -- | -- |
Total Investments in Securities: | $415,872,749 | $400,664,830 | $15,207,919 | $-- |
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 | 78.0% |
United Kingdom | 3.9% |
India | 3.2% |
Finland | 2.9% |
Sweden | 2.7% |
France | 2.4% |
Spain | 1.8% |
Korea (South) | 1.6% |
Netherlands | 1.4% |
Canada | 1.1% |
Others (Individually Less Than 1%) | 1.0% |
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, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $10,610,533) — See accompanying schedule: Unaffiliated issuers (cost $275,306,131) | $404,021,007 | |
Fidelity Central Funds (cost $11,851,742) | 11,851,742 | |
Total Investment in Securities (cost $287,157,873) | $415,872,749 | |
Cash | 29,895 | |
Foreign currency held at value (cost $3,701) | 3,680 | |
Receivable for fund shares sold | 216,580 | |
Dividends receivable | 87,991 | |
Distributions receivable from Fidelity Central Funds | 6,565 | |
Prepaid expenses | 1,338 | |
Other receivables | 31,243 | |
Total assets | 416,250,041 | |
Liabilities | ||
Payable for fund shares redeemed | $460,491 | |
Accrued management fee | 182,862 | |
Other affiliated payables | 76,616 | |
Other payables and accrued expenses | 790,471 | |
Collateral on securities loaned | 11,173,425 | |
Total liabilities | 12,683,865 | |
Net Assets | $403,566,176 | |
Net Assets consist of: | ||
Paid in capital | $262,466,983 | |
Total accumulated earnings (loss) | 141,099,193 | |
Net Assets | $403,566,176 | |
Net Asset Value, offering price and redemption price per share ($403,566,176 ÷ 31,256,302 shares) | $12.91 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $6,671,185 | |
Income from Fidelity Central Funds (including $63,060 from security lending) | 64,105 | |
Total income | 6,735,290 | |
Expenses | ||
Management fee | $2,414,468 | |
Transfer agent fees | 802,755 | |
Accounting fees | 179,009 | |
Custodian fees and expenses | 64,405 | |
Independent trustees' fees and expenses | 1,677 | |
Registration fees | 34,050 | |
Audit | 48,687 | |
Legal | 326 | |
Interest | 297 | |
Miscellaneous | 2,175 | |
Total expenses before reductions | 3,547,849 | |
Expense reductions | (10,655) | |
Total expenses after reductions | 3,537,194 | |
Net investment income (loss) | 3,198,096 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of foreign taxes of $60,458) | 34,527,859 | |
Foreign currency transactions | (2,662) | |
Total net realized gain (loss) | 34,525,197 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of decrease in deferred foreign taxes of $55,824) | (15,898,435) | |
Assets and liabilities in foreign currencies | (751) | |
Total change in net unrealized appreciation (depreciation) | (15,899,186) | |
Net gain (loss) | 18,626,011 | |
Net increase (decrease) in net assets resulting from operations | $21,824,107 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $3,198,096 | $3,203,439 |
Net realized gain (loss) | 34,525,197 | 21,464,476 |
Change in net unrealized appreciation (depreciation) | (15,899,186) | 92,679,813 |
Net increase (decrease) in net assets resulting from operations | 21,824,107 | 117,347,728 |
Distributions to shareholders | (34,390,230) | (30,160,728) |
Share transactions | ||
Proceeds from sales of shares | 52,081,537 | 151,879,800 |
Reinvestment of distributions | 32,470,195 | 28,391,578 |
Cost of shares redeemed | (108,715,196) | (182,471,304) |
Net increase (decrease) in net assets resulting from share transactions | (24,163,464) | (2,199,926) |
Total increase (decrease) in net assets | (36,729,587) | 84,987,074 |
Net Assets | ||
Beginning of period | 440,295,763 | 355,308,689 |
End of period | $403,566,176 | $440,295,763 |
Other Information | ||
Shares | ||
Sold | 3,719,197 | 12,945,504 |
Issued in reinvestment of distributions | 2,345,099 | 2,648,817 |
Redeemed | (7,824,819) | (15,799,791) |
Net increase (decrease) | (1,760,523) | (205,470) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Wireless Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $13.34 | $10.69 | $8.93 | $10.29 | $9.11 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .10 | .10 | .14 | .20D | .16 |
Net realized and unrealized gain (loss) | .54 | 3.50 | 1.93 | (.24)E | 1.39 |
Total from investment operations | .64 | 3.60 | 2.07 | (.04) | 1.55 |
Distributions from net investment income | (.09) | (.10) | (.12) | (.19) | (.14) |
Distributions from net realized gain | (.98) | (.86) | (.19) | (1.13) | (.24) |
Total distributions | (1.07) | (.95)F | (.31) | (1.32) | (.37)F |
Redemption fees added to paid in capitalB | – | – | – | – | –G |
Net asset value, end of period | $12.91 | $13.34 | $10.69 | $8.93 | $10.29 |
Total ReturnH | 4.40% | 36.09% | 23.01% | .21% | 17.21% |
Ratios to Average Net AssetsC,I,J | |||||
Expenses before reductions | .77% | .79% | .81% | .83% | .83% |
Expenses net of fee waivers, if any | .77% | .79% | .81% | .83% | .83% |
Expenses net of all reductions | .77% | .78% | .81% | .82% | .82% |
Net investment income (loss) | .69% | .80% | 1.39% | 2.07%D | 1.61% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $403,566 | $440,296 | $355,309 | $237,907 | $275,742 |
Portfolio turnover rateK | 30% | 55% | 78% | 54% | 85% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.03 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.74%.
E Net realized and unrealized gain (loss) per share reflects proceeds received from litigation which amounted to $.01 per share. Excluding these litigation proceeds, the total return would have been .12%.
F Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
K Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2022
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.
Funds may 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
Based on its investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the investing fund. These strategies are consistent with the investment objectives of the investing fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the investing fund.
Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio(a) |
Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | Less than .005% |
(a) Expenses expressed as a percentage of average net assets and are as of each underlying Central Fund's most recent annual or semi-annual shareholder report.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which contain the significant accounting policies (including investment valuation policies) of those funds, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies. 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 Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. 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 – Unadjusted 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. 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, 2022 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. Certain 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 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 include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable.
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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. 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, 2022, 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 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, certain foreign taxes and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows:
Gross unrealized appreciation | $151,764,571 |
Gross unrealized depreciation | (24,523,146) |
Net unrealized appreciation (depreciation) | $127,241,425 |
Tax Cost | $288,631,324 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $275,843 |
Undistributed long-term capital gain | $14,314,154 |
Net unrealized appreciation (depreciation) on securities and other investments | $127,237,143 |
The tax character of distributions paid was as follows:
February 28, 2022 | February 28, 2021 | |
Ordinary Income | $9,236,354 | $ 8,561,227 |
Long-term Capital Gains | 25,153,876 | 21,599,501 |
Total | $34,390,230 | $ 30,160,728 |
Restricted Securities (including Private Placements). 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 held at period end is included at the end of the Schedule of Investments, if applicable.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, as applicable, are noted in the table below.
Purchases ($) | Sales ($) | |
Wireless Portfolio | 135,373,236 | 187,005,034 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company 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 .22% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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 .52% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (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 .17% of average net assets.
Accounting 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. For the period, the fees were equivalent to the following annual rates:
% of Average Net Assets | |
Wireless Portfolio | .04 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 | |
Wireless Portfolio | $3,066 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. 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 | |
Wireless Portfolio | Borrower | $3,777,111 | .32% | $297 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
Wireless Portfolio | 11,877,392 | 16,493,122 | 2,685,278 |
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 listed below. During the period, there were no borrowings on this line of credit.
Amount | |
Wireless Portfolio | $791 |
7. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the 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. Affiliated security lending activity, if any, was as follows:
Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
Wireless Portfolio | $6,548 | $– | $– |
8. Expense Reductions.
During the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses in the amount of $10,655.
9. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a fund. The risk of material loss from such claims is considered remote.
10. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Fund's performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and Shareholders of Telecommunications Portfolio and Wireless Portfolio
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Telecommunications Portfolio and Wireless Portfolio (two of the funds constituting Fidelity Select Portfolios, hereafter collectively referred to as the “Funds”) as of February 28, 2022, the related statements of operations for the year ended February 28, 2022, the statements of changes in net assets for each of the two years in the period ended February 28, 2022, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of February 28, 2022, 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 ended February 28, 2022 and each of the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 28, 2022 by correspondence with the custodians. We believe that our audits provide a reasonable basis for our opinions.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
April 12, 2022
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
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 317 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 if you’re an individual investing directly with Fidelity, call 1-800-835-5092 if you’re a plan sponsor or participant with Fidelity as your recordkeeper or call 1-877-208-0098 on institutional accounts or if you’re an advisor or invest through one.
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. Robert A. Lawrence is an interested person and currently serves as Acting 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. David M. Thomas serves as Lead Independent Trustee 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 high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the funds' Board. 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 FMR 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 FMR, 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, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. 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+
Bettina Doulton (1964)
Year of Election or Appointment: 2020
Trustee
Ms. Doulton also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Doulton served in a variety of positions at Fidelity Investments, including as a managing director of research (2006-2007), portfolio manager to certain Fidelity® funds (1993-2005), equity analyst and portfolio assistant (1990-1993), and research assistant (1987-1990). Ms. Doulton currently owns and operates Phi Builders + Architects and Cellardoor Winery. Previously, Ms. Doulton served as a member of the Board of Brown Capital Management, LLC (2014-2018).
Robert A. Lawrence (1952)
Year of Election or Appointment: 2020
Trustee
Acting Chairman of the Board of Trustees
Mr. Lawrence also serves as Trustee of other funds. Previously, Mr. Lawrence served as a Member of the Advisory Board of certain funds. Prior to his retirement in 2008, Mr. Lawrence served as Vice President of certain Fidelity® funds (2006-2008), Senior Vice President, Head of High Income Division of Fidelity Management & Research Company (investment adviser firm, 2006-2008), and President of Fidelity Strategic Investments (investment adviser firm, 2002-2005).
* 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 FMR.
+ 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+
Thomas P. Bostick (1956)
Year of Election or Appointment: 2021
Trustee
Lieutenant General Bostick also serves as Trustee of other Fidelity® funds. Prior to his retirement, General Bostick (United States Army, Retired) held a variety of positions within the U.S. Army, including Commanding General and Chief of Engineers, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff and Director of Human Resources, U.S. Army (2009-2012). General Bostick currently serves as a member of the Board and Finance and Governance Committees of CSX Corporation (transportation, 2020-present) and a member of the Board and Corporate Governance and Nominating Committee of Perma-Fix Environmental Services, Inc. (nuclear waste management, 2020-present). General Bostick serves as Chief Executive Officer of Bostick Global Strategies, LLC (consulting, 2016-present) and as a member of the Board of HireVue, Inc. (video interview and assessment, 2020-present). Previously, General Bostick served as a Member of the Advisory Board of certain Fidelity® funds (2021), President, Intrexon Bioengineering (2018-2020) and Chief Operating Officer (2017-2020) and Senior Vice President of the Environment Sector (2016-2017) of Intrexon Corporation (biopharmaceutical company).
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 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 currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York and a member of the Board of The Leadership Academy (previously NYC Leadership Academy) (2012-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Vicki L. Fuller (1957)
Year of Election or Appointment: 2020
Trustee
Ms. Fuller also serves as Trustee of other Fidelity® funds. Previously, Ms. Fuller served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of two Blackstone business development companies (2020-present), as a member of the Board of Treliant, LLC (consulting, 2019-present), as a member of the Advisory Board of Ariel Alternatives, LLC (private equity, 2021-present) and as a member of the Board and Chair of the Audit Committee of Gusto, Inc. (software, 2021-present). In addition, Ms. Fuller currently serves as a member of the Board of Roosevelt University (2019-present) and as a member of the Executive Board of New York University’s Stern School of Business. Ms. Fuller previously served as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-2021).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Trustee
Ms. Kampling also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Finance Committee and Governance, Compensation and Nominating Committee of Xcel Energy Inc. (utilities company, 2020-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee and Chair of the Executive Development and Compensation Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a Member of the Advisory Board of certain Fidelity® funds (2020), a member of the Board, Compensation Committee and Executive Committee and Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-2021), a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Thomas A. Kennedy (1955)
Year of Election or Appointment: 2021
Trustee
Mr. Kennedy also serves as Trustee of other Fidelity® funds. Previously, Mr. Kennedy served as a Member of the Advisory Board of certain Fidelity® funds (2020) and held a variety of positions at Raytheon Company (aerospace and defense, 1983-2020), including Chairman and Chief Executive Officer (2014-2020) and Executive Vice President and Chief Operating Officer (2013-2014). Mr. Kennedy currently serves as Executive Chairman of the Board of Directors of Raytheon Technologies Corporation (aerospace and defense, 2020-present). He is also a member of the Rutgers School of Engineering Industry Advisory Board (2011-present) and a member of the UCLA Engineering Dean’s Executive Board (2016-present).
Oscar Munoz (1959)
Year of Election or Appointment: 2021
Trustee
Mr. Munoz also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Munoz served as Executive Chairman (2020-2021), Chief Executive Officer (2015-2020), President (2015-2016) and a member of the Board (2010-2021) of United Airlines Holdings, Inc. Mr. Munoz currently serves as a member of the Board of CBRE Group, Inc. (commercial real estate, 2020-present), a member of the Board of Univision Communications, Inc. (Hispanic media, 2020-present) and a member of the Advisory Board of Salesforce.com, Inc. (cloud-based software, 2020-present). Previously, Mr. Munoz served as a Member of the Advisory Board of certain Fidelity® funds (2021).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Lead Independent Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as a member of the Board of Fortune Brands Home and Security (home and security products, 2004-present) and as Director (2013-present) and Non-Executive Chairman of the Board (2022-present) of Interpublic Group of Companies, Inc. (marketing communication).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Trustee
Ms. Tomasky also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Executive Committee, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present) and as a member of the Board of its subsidiary company, Public Service Electric and Gas Co. (2021-present). In addition, Ms. Tomasky currently serves as a member (2009-present) and President (2020-present) of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board and Kenyon in the World Committee of Kenyon College (2016-present). Previously, Ms. Tomasky served as a Member of the Advisory Board of certain Fidelity® funds (2020), as a member of the Board of the Columbus Regional Airport Authority (2007-2020), as a member of the Board (2011-2018) and Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee of other Fidelity® funds. Previously, Mr. Wiley served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley also previously served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018), a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018) and a member of the Board of High Point Resources (exploration and production, 2005-2020).
+ 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 (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as an officer of other funds. Mr. Brown serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
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 Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as an officer of other funds. Mr. Davis serves as Assistant Treasurer of FIMM, LLC (2021-present), FMR Capital, Inc. (2017-present), FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); 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).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2017-present). Previously, Ms. Del Prato served as President and Treasurer of The North Carolina Capital Management Trust: Cash Portfolio and Term Portfolio (2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present); Secretary of FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); and Assistant Secretary of FIMM, LLC (2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); 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).
Jason P. Pogorelec (1975)
Year of Election or Appointment: 2020
Chief Compliance Officer
Mr. Pogorelec also serves as Chief Compliance Officer of other funds. Mr. Pogorelec is a senior Vice President of Asset Management Compliance for Fidelity Investments and is an employee of Fidelity Investments (2006-present). Previously, Mr. Pogorelec served as Vice President, Associate General Counsel for Fidelity Investments (2010-2020) and Assistant Secretary of certain Fidelity funds (2015-2020).
Brett Segaloff (1972)
Year of Election or Appointment: 2021
Anti-Money Laundering (AML) Officer
Mr. Segaloff also serves as an AML Officer of other funds and other related entities. He is Director, Anti-Money Laundering (2007-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments (1996-present).
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), 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 Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as an officer of other funds. Mr. Wegmann serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2011-present). Previously, Mr. Wegmann served as Assistant Treasurer of certain Fidelity® funds (2019-2021).
Shareholder Expense Example
As a shareholder, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or redemption proceeds, as applicable and (2) ongoing costs, which generally include 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 a 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, 2021 to February 28, 2022).
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 for a class/Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If any fund is a shareholder of any underlying mutual funds or exchange-traded funds (ETFs) (the Underlying Funds), such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses incurred presented in the table. These fees and expenses are not included in the 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 actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the 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. If any fund is a shareholder of any Underlying Funds, such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses as presented in the table. These fees and expenses are not included in the 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, 2021 | Ending Account Value February 28, 2022 | Expenses Paid During Period-B September 1, 2021 to February 28, 2022 | |
Telecommunications Portfolio | ||||
Class A | 1.09% | |||
Actual | $1,000.00 | $869.80 | $5.05 | |
Hypothetical-C | $1,000.00 | $1,019.39 | $5.46 | |
Class M | 1.39% | |||
Actual | $1,000.00 | $868.60 | $6.44 | |
Hypothetical-C | $1,000.00 | $1,017.90 | $6.95 | |
Class C | 1.84% | |||
Actual | $1,000.00 | $866.50 | $8.52 | |
Hypothetical-C | $1,000.00 | $1,015.67 | $9.20 | |
Telecommunications | .79% | |||
Actual | $1,000.00 | $871.20 | $3.67 | |
Hypothetical-C | $1,000.00 | $1,020.88 | $3.96 | |
Class I | .76% | |||
Actual | $1,000.00 | $871.30 | $3.53 | |
Hypothetical-C | $1,000.00 | $1,021.03 | $3.81 | |
Class Z | .66% | |||
Actual | $1,000.00 | $871.70 | $3.06 | |
Hypothetical-C | $1,000.00 | $1,021.52 | $3.31 | |
Wireless Portfolio | .77% | |||
Actual | $1,000.00 | $913.70 | $3.65 | |
Hypothetical-C | $1,000.00 | $1,020.98 | $3.86 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/ 365 (to reflect the one-half year period). The fees and expenses of any Underlying Funds are not included in each annualized expense ratio.
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 | ||||
Class A | 04/11/22 | 04/08/22 | $0.221 | $1.49 |
Class M | 04/11/22 | 04/08/22 | $0.188 | $1.49 |
Class C | 04/11/22 | 04/08/22 | $0.131 | $1.49 |
Telecommunications | 04/11/22 | 04/08/22 | $0.260 | $1.49 |
Class I | 04/11/22 | 04/08/22 | $0.276 | $1.49 |
Class Z | 04/11/22 | 04/08/22 | $0.277 | $1.49 |
Wireless Portfolio | ||||
Wireless | 04/11/22 | 04/08/22 | $0.003 | $0.463 |
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2022, or, if subsequently determined to be different, the net capital gain of such year.
Telecommunications Portfolio | $28,676,804 |
Wireless Portfolio | $32,032,538 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
April 2021 | December 2021 | |
Telecommunications Portfolio | ||
Class A | 77% | 100% |
Class M | 82% | 100% |
Class C | 92% | 100% |
Telecommunications | 73% | 100% |
Class I | 74% | 100% |
Class Z | 72% | 100% |
Wireless Portfolio | ||
Wireless | 11% | 99% |
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 2021 | December 2021 | |
Telecommunications Portfolio | ||
Class A | 65% | 100% |
Class M | 69% | 100% |
Class C | 78% | 100% |
Telecommunications | 61% | 100% |
Class I | 62% | 100% |
Class Z | 61% | 100% |
Wireless Portfolio | ||
Wireless | 33% | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds qualify as a section 199A dividend:
April 2021 | December 2021 | |
Wireless Portfolio | 9% | – |
The funds hereby designate the percentages noted below of the short-term capital gain dividends distributed during the fiscal year as qualifying to be taxed as short-term capital gain dividends for nonresident alien shareholders:
April 2021 | December 2021 | |
Telecommunications Portfolio | 99.82% | 100.00% |
Wireless Portfolio | 100.00% | – |
The funds will notify shareholders in January 2023 of amounts for use in preparing 2022 income tax returns.
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Funds have adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage each Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. Each Fund’s Board of Trustees (the Board) has designated each Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2020 through November 30, 2021. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
SELTS-ANN-0422
1.846050.115
Fidelity® Select Portfolios®
Consumer Staples Sector
Consumer Staples Portfolio
February 28, 2022
Includes Fidelity and Fidelity Advisor share classes
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Contents
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 if you’re an individual investing directly with Fidelity, call 1-800-835-5092 if you’re a plan sponsor or participant with Fidelity as your recordkeeper or call 1-877-208-0098 on institutional accounts or if you’re an advisor or invest through one to request a free copy of the proxy voting guidelines.
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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. © 2022 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-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT 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.
Note to Shareholders:
Early in 2020, the outbreak and spread of COVID-19 emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread. The pandemic prompted a number of measures to limit the spread of COVID-19, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. To help stem the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
In general, the overall impact of the pandemic lessened in 2021, amid a resilient economy and widespread distribution of three COVID-19 vaccines granted emergency use authorization from the U.S. Food and Drug Administration (FDA) early in the year. Still, the situation remains dynamic, and the extent and duration of its influence on financial markets and the economy is highly uncertain, due in part to a recent spike in cases based on highly contagious variants of the coronavirus.
Extreme events such as the COVID-19 crisis are exogenous shocks that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets. Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we continue to take extra steps to be responsive to customer needs. We encourage you to visit us online, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Class A (incl. 5.75% sales charge) | 11.99% | 6.21% | 8.75% |
Class M (incl. 3.50% sales charge) | 14.36% | 6.43% | 8.71% |
Class C (incl. contingent deferred sales charge) | 16.92% | 6.68% | 8.75% |
Consumer Staples Portfolio | 19.16% | 7.79% | 9.71% |
Class I | 19.15% | 7.78% | 9.69% |
Class Z | 19.29% | 7.87% | 9.74% |
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.
The initial offering of Class Z shares took place on October 2, 2018. Returns prior to October 2, 2018, are those of Class I.
$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 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789796813_740.jpg)
Period Ending Values | ||
$25,252 | Consumer Staples Portfolio | |
$39,037 | S&P 500® Index |
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Ben Shuleva: For the fiscal year ending February 28, 2022, the fund's share classes (excluding sales charges, if applicable) gained roughly 18% to 19%, underperforming the 19.87% gain of the MSCI US IMI Consumer Staples 25/50 Index, but outperforming the broad-based S&P 500® index. The primary detractors from performance versus the sector index were security selection and an underweighting in hypermarkets & super centers. The fund's biggest individual relative detractor was our lighter-than-index stake in Costco Wholesale, which gained 41%. Costco Wholesale was not held at period end. Other notable relative detractors included overweightings in Monster Beverage (-4%), which was among the fund's largest holdings, and TreeHouse Foods (-21%), a position we increased this period. Conversely, the largest contributor to performance versus the sector index was our security selection in distillers & vintners. Also bolstering the fund's relative performance was an overweighting in soft drinks and an underweighting in drug retail. The biggest individual relative contributor was an overweight position in Coca-Cola (+31%), which was one of our biggest holdings. Underweightings in Estée Lauder (-2%), a new addition to the portfolio the past year, and Colgate-Palmolive (+7%), which was not held at period end, also aided relative performance. Notable changes in positioning include increased exposure to the tobacco subindustry and a lower allocation to household products.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 October 1, 2021, Fidelity increased dividend distribution frequency for the fund because of its focus on industries that are associated with dividend-paying companies. Dividend distributions will be paid four times a year: April, July, October and December. Quarterly dividend distributions will commence in April 2022. Please note that there are no changes to the frequency of capital gain distributions.Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
The Coca-Cola Co. | 15.6 |
Procter & Gamble Co. | 14.0 |
Walmart, Inc. | 7.1 |
Altria Group, Inc. | 6.3 |
Philip Morris International, Inc. | 6.3 |
Mondelez International, Inc. | 4.8 |
Monster Beverage Corp. | 4.5 |
Kimberly-Clark Corp. | 3.3 |
PepsiCo, Inc. | 3.2 |
Keurig Dr. Pepper, Inc. | 3.1 |
68.2 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Beverages | 32.1% | |
Household Products | 22.0% | |
Food Products | 15.0% | |
Tobacco | 12.9% | |
Food & Staples Retailing | 10.9% | |
All Others* | 7.1% |
* Includes Short-Term investments and Net Other Assets (Liabilities).
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 98.9% | |||
Shares | Value | ||
Beverages - 32.1% | |||
Brewers - 2.6% | |||
Boston Beer Co., Inc. Class A (a) | 102,100 | $39,151,266 | |
Molson Coors Beverage Co. Class B | 104,700 | 5,463,246 | |
44,614,512 | |||
Distillers & Vintners - 2.9% | |||
Brown-Forman Corp. Class B (non-vtg.) | 14,200 | 926,266 | |
Constellation Brands, Inc. Class A (sub. vtg.) | 209,684 | 45,212,064 | |
Diageo PLC | 83,000 | 4,112,015 | |
50,250,345 | |||
Soft Drinks - 26.6% | |||
Celsius Holdings, Inc. (a) | 15,000 | 958,350 | |
Keurig Dr. Pepper, Inc. | 1,364,227 | 52,754,658 | |
Monster Beverage Corp. (a) | 904,513 | 76,340,897 | |
PepsiCo, Inc. | 338,104 | 55,361,149 | |
Primo Water Corp. | 116,600 | 1,695,364 | |
The Coca-Cola Co. | 4,279,518 | 266,357,197 | |
453,467,615 | |||
TOTAL BEVERAGES | 548,332,472 | ||
Food & Staples Retailing - 10.9% | |||
Drug Retail - 0.2% | |||
Walgreens Boots Alliance, Inc. | 59,100 | 2,723,919 | |
Food Distributors - 2.9% | |||
Performance Food Group Co. (a) | 119,300 | 6,685,572 | |
Sysco Corp. | 122,356 | 10,657,208 | |
U.S. Foods Holding Corp. (a) | 841,874 | 32,908,855 | |
50,251,635 | |||
Food Retail - 0.6% | |||
Albertsons Companies, Inc. | 88,500 | 2,579,775 | |
Grocery Outlet Holding Corp. (a) | 271,650 | 7,554,587 | |
10,134,362 | |||
Hypermarkets & Super Centers - 7.2% | |||
BJ's Wholesale Club Holdings, Inc. (a) | 28,300 | 1,779,221 | |
Walmart, Inc. | 896,700 | 121,197,972 | |
122,977,193 | |||
TOTAL FOOD & STAPLES RETAILING | 186,087,109 | ||
Food Products - 15.0% | |||
Agricultural Products - 1.8% | |||
Archer Daniels Midland Co. | 45,500 | 3,569,475 | |
Bunge Ltd. | 159,793 | 16,706,358 | |
Darling Ingredients, Inc. (a) | 152,200 | 11,031,456 | |
31,307,289 | |||
Packaged Foods & Meats - 13.2% | |||
Conagra Brands, Inc. | 382,241 | 13,366,968 | |
Freshpet, Inc. (a) | 95,200 | 9,065,896 | |
Laird Superfood, Inc. (a) | 181,882 | 1,118,574 | |
Lamb Weston Holdings, Inc. | 779,727 | 51,797,265 | |
Mission Produce, Inc. (a) | 35,037 | 454,780 | |
Mondelez International, Inc. | 1,257,297 | 82,327,808 | |
Nomad Foods Ltd. (a) | 198,659 | 5,002,234 | |
Pilgrim's Pride Corp. (a) | 43,100 | 1,016,298 | |
Post Holdings, Inc. (a) | 46,100 | 4,846,954 | |
Sanderson Farms, Inc. | 20,900 | 3,732,531 | |
Sovos Brands, Inc. | 91,275 | 1,108,079 | |
The Real Good Food Co. LLC Class B unit | 58,666 | 333,282 | |
TreeHouse Foods, Inc. (a) | 829,784 | 32,569,022 | |
Tyson Foods, Inc. Class A | 202,666 | 18,779,032 | |
225,518,723 | |||
TOTAL FOOD PRODUCTS | 256,826,012 | ||
Hotels, Restaurants & Leisure - 0.0% | |||
Restaurants - 0.0% | |||
Compass Group PLC | 897 | 20,275 | |
Household Durables - 0.7% | |||
Housewares & Specialties - 0.7% | |||
Tupperware Brands Corp. (a)(b) | 626,362 | 11,418,579 | |
Household Products - 22.0% | |||
Household Products - 22.0% | |||
Energizer Holdings, Inc. (b) | 600,044 | 20,035,469 | |
Kimberly-Clark Corp. | 434,333 | 56,528,440 | |
Procter & Gamble Co. | 1,534,182 | 239,163,632 | |
Reckitt Benckiser Group PLC | 29,700 | 2,514,910 | |
Reynolds Consumer Products, Inc. (b) | 931,711 | 27,737,036 | |
The Clorox Co. | 202,774 | 29,562,421 | |
375,541,908 | |||
Media - 1.0% | |||
Advertising - 1.0% | |||
Advantage Solutions, Inc. Class A (a) | 2,167,100 | 17,055,077 | |
Personal Products - 4.3% | |||
Personal Products - 4.3% | |||
Edgewell Personal Care Co. | 97,400 | 3,475,232 | |
Estee Lauder Companies, Inc. Class A | 62,255 | 18,448,024 | |
Herbalife Nutrition Ltd. (a) | 977,750 | 34,788,345 | |
Shiseido Co. Ltd. | 94,875 | 5,418,599 | |
The Honest Co., Inc. | 451,770 | 2,611,231 | |
Unilever PLC | 173,984 | 8,739,560 | |
73,480,991 | |||
Tobacco - 12.9% | |||
Tobacco - 12.9% | |||
Altria Group, Inc. | 2,098,917 | 107,653,453 | |
Philip Morris International, Inc. | 1,054,482 | 106,576,496 | |
RLX Technology, Inc. ADR (a)(b) | 1,677,169 | 5,165,681 | |
219,395,630 | |||
TOTAL COMMON STOCKS | |||
(Cost $1,315,252,645) | 1,688,158,053 | ||
Money Market Funds - 1.6% | |||
Fidelity Cash Central Fund 0.07% (c) | 14,585,360 | 14,588,277 | |
Fidelity Securities Lending Cash Central Fund 0.07% (c)(d) | 13,162,107 | 13,163,424 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $27,751,701) | 27,751,701 | ||
TOTAL INVESTMENT IN SECURITIES - 100.5% | |||
(Cost $1,343,004,346) | 1,715,909,754 | ||
NET OTHER ASSETS (LIABILITIES) - (0.5)% | (9,339,396) | ||
NET ASSETS - 100% | $1,706,570,358 |
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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $-- | $276,238,354 | $261,650,077 | $2,374 | $-- | $-- | $14,588,277 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 33,838,939 | 149,205,666 | 169,881,181 | 37,193 | -- | -- | 13,163,424 | 0.0% |
Total | $33,838,939 | $425,444,020 | $431,531,258 | $39,567 | $-- | $-- | $27,751,701 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $1,688,158,053 | $1,672,438,011 | $15,720,042 | $-- |
Money Market Funds | 27,751,701 | 27,751,701 | -- | -- |
Total Investments in Securities: | $1,715,909,754 | $1,700,189,712 | $15,720,042 | $-- |
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $12,908,881) — See accompanying schedule: Unaffiliated issuers (cost $1,315,252,645) | $1,688,158,053 | |
Fidelity Central Funds (cost $27,751,701) | 27,751,701 | |
Total Investment in Securities (cost $1,343,004,346) | $1,715,909,754 | |
Receivable for investments sold | 16,359,740 | |
Receivable for fund shares sold | 5,982,051 | |
Dividends receivable | 1,334,613 | |
Interest receivable | 9 | |
Distributions receivable from Fidelity Central Funds | 1,742 | |
Prepaid expenses | 9,162 | |
Other receivables | 318,078 | |
Total assets | 1,739,915,149 | |
Liabilities | ||
Payable to custodian bank | $10 | |
Payable for investments purchased | 17,488,352 | |
Payable for fund shares redeemed | 1,191,889 | |
Accrued management fee | 739,550 | |
Distribution and service plan fees payable | 163,644 | |
Other affiliated payables | 255,540 | |
Other payables and accrued expenses | 342,611 | |
Collateral on securities loaned | 13,163,195 | |
Total liabilities | 33,344,791 | |
Net Assets | $1,706,570,358 | |
Net Assets consist of: | ||
Paid in capital | $1,312,851,588 | |
Total accumulated earnings (loss) | 393,718,770 | |
Net Assets | $1,706,570,358 | |
Net Asset Value and Maximum Offering Price | ||
Class A: | ||
Net Asset Value and redemption price per share ($293,276,437 ÷ 3,069,414 shares)(a) | $95.55 | |
Maximum offering price per share (100/94.25 of $95.55) | $101.38 | |
Class M: | ||
Net Asset Value and redemption price per share ($64,706,833 ÷ 685,552 shares)(a) | $94.39 | |
Maximum offering price per share (100/96.50 of $94.39) | $97.81 | |
Class C: | ||
Net Asset Value and offering price per share ($88,644,986 ÷ 958,503 shares)(a) | $92.48 | |
Consumer Staples: | ||
Net Asset Value, offering price and redemption price per share ($1,032,956,233 ÷ 10,676,982 shares) | $96.75 | |
Class I: | ||
Net Asset Value, offering price and redemption price per share ($149,159,761 ÷ 1,545,966 shares) | $96.48 | |
Class Z: | ||
Net Asset Value, offering price and redemption price per share ($77,826,108 ÷ 807,657 shares) | $96.36 |
(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, 2022 | ||
Investment Income | ||
Dividends | $36,800,317 | |
Interest | 2,804 | |
Income from Fidelity Central Funds (including $37,193 from security lending) | 39,567 | |
Total income | 36,842,688 | |
Expenses | ||
Management fee | $7,862,127 | |
Transfer agent fees | 2,454,502 | |
Distribution and service plan fees | 1,985,818 | |
Accounting fees | 469,081 | |
Custodian fees and expenses | 20,641 | |
Independent trustees' fees and expenses | 5,343 | |
Registration fees | 143,136 | |
Audit | 53,888 | |
Legal | 1,619 | |
Interest | 1,332 | |
Miscellaneous | 9,348 | |
Total expenses before reductions | 13,006,835 | |
Expense reductions | (33,557) | |
Total expenses after reductions | 12,973,278 | |
Net investment income (loss) | 23,869,410 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 117,785,326 | |
Foreign currency transactions | 23,364 | |
Total net realized gain (loss) | 117,808,690 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | 106,556,121 | |
Assets and liabilities in foreign currencies | (36,865) | |
Total change in net unrealized appreciation (depreciation) | 106,519,256 | |
Net gain (loss) | 224,327,946 | |
Net increase (decrease) in net assets resulting from operations | $248,197,356 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $23,869,410 | $23,747,237 |
Net realized gain (loss) | 117,808,690 | 57,686,836 |
Change in net unrealized appreciation (depreciation) | 106,519,256 | 128,330,786 |
Net increase (decrease) in net assets resulting from operations | 248,197,356 | 209,764,859 |
Distributions to shareholders | (153,414,832) | (46,152,171) |
Share transactions - net increase (decrease) | 254,802,169 | (183,556,146) |
Total increase (decrease) in net assets | 349,584,693 | (19,943,458) |
Net Assets | ||
Beginning of period | 1,356,985,665 | 1,376,929,123 |
End of period | $1,706,570,358 | $1,356,985,665 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Consumer Staples Portfolio Class A
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $89.40 | $79.57 | $76.88 | $87.07 | $96.18 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | 1.40 | 1.34 | 1.40 | 2.08D | 1.54 |
Net realized and unrealized gain (loss) | 14.98 | 11.24 | 3.54 | (2.64) | (2.80) |
Total from investment operations | 16.38 | 12.58 | 4.94 | (.56) | (1.26) |
Distributions from net investment income | (1.55) | (1.42) | (1.35) | (2.11) | (1.55) |
Distributions from net realized gain | (8.68) | (1.33) | (.90) | (7.53) | (6.30) |
Total distributions | (10.23) | (2.75) | (2.25) | (9.63)E | (7.85) |
Redemption fees added to paid in capitalB | – | – | – | – | – |
Net asset value, end of period | $95.55 | $89.40 | $79.57 | $76.88 | $87.07 |
Total ReturnF,G | 18.83% | 16.00% | 6.17% | (.32)% | (1.68)% |
Ratios to Average Net AssetsC,H,I | |||||
Expenses before reductions | 1.01% | 1.04% | 1.04% | 1.05% | 1.05% |
Expenses net of fee waivers, if any | 1.01% | 1.04% | 1.04% | 1.05% | 1.05% |
Expenses net of all reductions | 1.01% | 1.03% | 1.04% | 1.04% | 1.04% |
Net investment income (loss) | 1.45% | 1.57% | 1.67% | 2.65%D | 1.60% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $293,276 | $248,234 | $239,067 | $232,020 | $317,366 |
Portfolio turnover rateJ | 61% | 51% | 40% | 41%K | 76% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.69 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.78%.
E Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Consumer Staples Portfolio Class M
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $88.43 | $78.74 | $76.13 | $86.30 | $95.42 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | 1.13 | 1.10 | 1.16 | 1.85D | 1.27 |
Net realized and unrealized gain (loss) | 14.81 | 11.11 | 3.50 | (2.61) | (2.78) |
Total from investment operations | 15.94 | 12.21 | 4.66 | (.76) | (1.51) |
Distributions from net investment income | (1.30) | (1.19) | (1.15) | (1.88) | (1.31) |
Distributions from net realized gain | (8.68) | (1.33) | (.90) | (7.53) | (6.30) |
Total distributions | (9.98) | (2.52) | (2.05) | (9.41) | (7.61) |
Redemption fees added to paid in capitalB | – | – | – | – | – |
Net asset value, end of period | $94.39 | $88.43 | $78.74 | $76.13 | $86.30 |
Total ReturnE,F | 18.51% | 15.69% | 5.88% | (.59)% | (1.94)% |
Ratios to Average Net AssetsC,G,H | |||||
Expenses before reductions | 1.28% | 1.31% | 1.31% | 1.33% | 1.32% |
Expenses net of fee waivers, if any | 1.28% | 1.31% | 1.31% | 1.32% | 1.32% |
Expenses net of all reductions | 1.28% | 1.30% | 1.31% | 1.31% | 1.31% |
Net investment income (loss) | 1.18% | 1.30% | 1.40% | 2.37%D | 1.33% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $64,707 | $56,664 | $55,954 | $60,069 | $76,572 |
Portfolio turnover rateI | 61% | 51% | 40% | 41%J | 76% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.68 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.50%.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Consumer Staples Portfolio Class C
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $86.73 | $77.27 | $74.79 | $84.85 | $93.89 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .65 | .68 | .75 | 1.46D | .81 |
Net realized and unrealized gain (loss) | 14.51 | 10.87 | 3.44 | (2.57) | (2.73) |
Total from investment operations | 15.16 | 11.55 | 4.19 | (1.11) | (1.92) |
Distributions from net investment income | (.79) | (.80) | (.81) | (1.43) | (.82) |
Distributions from net realized gain | (8.62) | (1.30) | (.90) | (7.53) | (6.30) |
Total distributions | (9.41) | (2.09)E | (1.71) | (8.95)E | (7.12) |
Redemption fees added to paid in capitalB | – | – | – | – | – |
Net asset value, end of period | $92.48 | $86.73 | $77.27 | $74.79 | $84.85 |
Total ReturnF,G | 17.92% | 15.14% | 5.39% | (1.05)% | (2.41)% |
Ratios to Average Net AssetsC,H,I | |||||
Expenses before reductions | 1.77% | 1.79% | 1.79% | 1.79% | 1.79% |
Expenses net of fee waivers, if any | 1.76% | 1.79% | 1.79% | 1.79% | 1.79% |
Expenses net of all reductions | 1.76% | 1.78% | 1.79% | 1.78% | 1.78% |
Net investment income (loss) | .70% | .83% | .92% | 1.91%D | .86% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $88,645 | $104,955 | $117,328 | $150,822 | $228,874 |
Portfolio turnover rateJ | 61% | 51% | 40% | 41%K | 76% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.67 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 1.04%.
E Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
I Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
J Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
K Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Consumer Staples Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $90.40 | $80.42 | $77.63 | $87.85 | $97.01 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | 1.69 | 1.60 | 1.66 | 2.34D | 1.82 |
Net realized and unrealized gain (loss) | 15.16 | 11.39 | 3.59 | (2.67) | (2.82) |
Total from investment operations | 16.85 | 12.99 | 5.25 | (.33) | (1.00) |
Distributions from net investment income | (1.81) | (1.68) | (1.55) | (2.36) | (1.86) |
Distributions from net realized gain | (8.68) | (1.33) | (.90) | (7.53) | (6.30) |
Total distributions | (10.50)E | (3.01) | (2.46)E | (9.89) | (8.16) |
Redemption fees added to paid in capitalB | – | – | – | – | – |
Net asset value, end of period | $96.75 | $90.40 | $80.42 | $77.63 | $87.85 |
Total ReturnF | 19.16% | 16.34% | 6.48% | (.03)% | (1.40)% |
Ratios to Average Net AssetsC,G,H | |||||
Expenses before reductions | .73% | .75% | .75% | .77% | .76% |
Expenses net of fee waivers, if any | .73% | .75% | .75% | .76% | .76% |
Expenses net of all reductions | .73% | .74% | .75% | .75% | .76% |
Net investment income (loss) | 1.74% | 1.86% | 1.96% | 2.94%D | 1.89% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $1,032,956 | $770,644 | $773,437 | $814,350 | $1,328,696 |
Portfolio turnover rateI | 61% | 51% | 40% | 41%J | 76% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.69 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 2.07%.
E Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Consumer Staples Portfolio Class I
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $90.17 | $80.23 | $77.45 | $87.68 | $96.82 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | 1.67 | 1.60 | 1.65 | 2.33D | 1.81 |
Net realized and unrealized gain (loss) | 15.13 | 11.34 | 3.58 | (2.68) | (2.82) |
Total from investment operations | 16.80 | 12.94 | 5.23 | (.35) | (1.01) |
Distributions from net investment income | (1.80) | (1.67) | (1.55) | (2.36) | (1.83) |
Distributions from net realized gain | (8.68) | (1.33) | (.90) | (7.53) | (6.30) |
Total distributions | (10.49)E | (3.00) | (2.45) | (9.88)E | (8.13) |
Redemption fees added to paid in capitalB | – | – | – | – | – |
Net asset value, end of period | $96.48 | $90.17 | $80.23 | $77.45 | $87.68 |
Total ReturnF | 19.15% | 16.32% | 6.48% | (.04)% | (1.41)% |
Ratios to Average Net AssetsC,G,H | |||||
Expenses before reductions | .74% | .76% | .76% | .77% | .78% |
Expenses net of fee waivers, if any | .74% | .75% | .76% | .77% | .78% |
Expenses net of all reductions | .74% | .75% | .76% | .76% | .77% |
Net investment income (loss) | 1.72% | 1.86% | 1.95% | 2.93%D | 1.88% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $149,160 | $132,898 | $149,514 | $159,614 | $240,605 |
Portfolio turnover rateI | 61% | 51% | 40% | 41%J | 76% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.69 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been 2.06%.
E Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
J Portfolio turnover rate excludes securities received or delivered in-kind.
See accompanying notes which are an integral part of the financial statements.
Consumer Staples Portfolio Class Z
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 B |
Selected Per–Share Data | ||||
Net asset value, beginning of period | $90.08 | $80.14 | $77.36 | $81.61 |
Income from Investment Operations | ||||
Net investment income (loss)C,D | 1.79 | 1.71 | 1.78 | .05E |
Net realized and unrealized gain (loss) | 15.10 | 11.35 | 3.56 | .33F |
Total from investment operations | 16.89 | 13.06 | 5.34 | .38 |
Distributions from net investment income | (1.93) | (1.79) | (1.66) | (2.23) |
Distributions from net realized gain | (8.68) | (1.33) | (.90) | (2.40) |
Total distributions | (10.61) | (3.12) | (2.56) | (4.63) |
Redemption fees added to paid in capitalC | – | – | – | – |
Net asset value, end of period | $96.36 | $90.08 | $80.14 | $77.36 |
Total ReturnG,H | 19.29% | 16.49% | 6.61% | .79% |
Ratios to Average Net AssetsD,I,J | ||||
Expenses before reductions | .61% | .62% | .63% | .63%K |
Expenses net of fee waivers, if any | .61% | .62% | .63% | .62%K |
Expenses net of all reductions | .61% | .62% | .62% | .61%K |
Net investment income (loss) | 1.85% | 1.99% | 2.08% | .16%E,K |
Supplemental Data | ||||
Net assets, end of period (000 omitted) | $77,826 | $43,591 | $41,629 | $8,052 |
Portfolio turnover rateL | 61% | 51% | 40% | 41%M |
A For the year ended February 29.
B For the period October 2, 2018 (commencement of sale of shares) through February 28, 2019.
C Calculated based on average shares outstanding during the period.
D Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
E Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.26 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been (.69) %.
F 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.
G Total returns for periods of less than one year are not annualized.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
J Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
K Annualized
L Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
M 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, 2022
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 M, Class C, Consumer Staples, Class I and Class Z 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. Effective June 21, 2021, Class C shares will automatically convert to Class A shares after a holding period of eight years from the initial date of purchase, with certain exceptions. Prior to June 21, 2021, Class C shares automatically converted to Class A shares after a holding period of ten years from the initial date of purchase, with certain exceptions.
2. Investments in Fidelity Central Funds.
Funds may 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
Based on its investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the investing fund. These strategies are consistent with the investment objectives of the investing fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the investing fund.
Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio(a) |
Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | Less than .005% |
(a) Expenses expressed as a percentage of average net assets and are as of each underlying Central Fund's most recent annual or semi-annual shareholder report.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which contain the significant accounting policies (including investment valuation policies) of those funds, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies. 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 Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. 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 – Unadjusted 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. 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, 2022 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. Certain 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 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 include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable.
Class Allocations and Expenses. Investment income, realized and unrealized capital gains and losses, common expenses of a 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 a fund. Each class differs with respect to transfer agent and distribution and service plan fees incurred, as applicable. Certain expense reductions may also differ by class, if applicable. 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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. 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 certain Funds, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in affiliated mutual funds, are marked-to-market and remain in a fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees presented below are included in the accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, as applicable.
Consumer Staples Portfolio | $300,374 |
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, 2022, 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 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.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows:
Gross unrealized appreciation | $410,553,593 |
Gross unrealized depreciation | (43,989,632) |
Net unrealized appreciation (depreciation) | $366,563,961 |
Tax Cost | $1,349,345,793 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $2,774,461 |
Undistributed long-term capital gain | $24,664,179 |
Net unrealized appreciation (depreciation) on securities and other investments | $366,560,728 |
The tax character of distributions paid was as follows:
February 28, 2022 | February 28, 2021 | |
Ordinary Income | $63,314,112 | $ 33,435,414 |
Long-term Capital Gains | 90,100,720 | 12,716,757 |
Total | $153,414,832 | $ 46,152,171 |
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind transactions, as applicable, are noted in the table below.
Purchases ($) | Sales ($) | |
Consumer Staples Portfolio | 1,025,873,396 | 911,717,786 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company 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 .22% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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 .53% 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 Company LLC (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% | $695,962 | $6,925 |
Class M | .25% | .25% | 311,208 | 458 |
Class C | .75% | .25% | 978,648 | 55,850 |
$1,985,818 | $63,233 |
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 M 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 M and Class C redemptions. The deferred sales charges are 1.00% for Class C shares, 1.00% for certain purchases of Class A shares and .25% for certain purchases of Class M shares.
For the period, sales charge amounts retained by FDC were as follows:
Retained by FDC | |
Class A | $82,043 |
Class M | 12,242 |
Class C(a) | 896 |
$95,181 |
(a) When 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 LLC (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, except for Class Z. FIIOC receives an asset-based fee of Class Z's average net assets. 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 | $533,548 | .19 |
Class M | 129,081 | .21 |
Class C | 191,334 | .20 |
Consumer Staples | 1,338,815 | .16 |
Class I | 238,742 | .17 |
Class Z | 22,982 | .04 |
$2,454,502 |
Accounting 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. For the period, the fees were equivalent to the following annual rates:
% of Average Net Assets | |
Consumer Staples Portfolio | .03 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 | |
Consumer Staples Portfolio | $21,135 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), the Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. 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 | |
Consumer Staples Portfolio | Borrower | $5,105,069 | .31% | $1,276 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
Consumer Staples Portfolio | 77,391,601 | 65,624,922 | 7,909,437 |
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 listed below. During the period, there were no borrowings on this line of credit.
Amount | |
Consumer Staples Portfolio | $2,486 |
7. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the 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. Affiliated security lending activity, if any, was as follows:
Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
Consumer Staples Portfolio | $3,782 | $– | $– |
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. Any open loans, including accrued interest, at period end are presented under the caption "Notes payable" in the Statement of Assets and Liabilities, if applicable. Activity in this program during the period for which loans were outstanding was as follows:
Average Loan Balance | Weighted Average Interest Rate | Interest Expense | |
Consumer Staples Portfolio | $864,500 | .58% | $56 |
9. Expense Reductions.
During the period the investment adviser or an affiliate reimbursed and/or waived a portion of fund-level operating expenses in the amount of $33,557.
10. Distributions to Shareholders.
Distributions to shareholders of each class were as follows:
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Consumer Staples Portfolio | ||
Distributions to shareholders | ||
Class A | $28,728,133 | $7,785,064 |
Class M | 6,378,016 | 1,694,592 |
Class C | 9,724,881 | 2,915,694 |
Consumer Staples | 88,326,666 | 26,940,406 |
Class I | 14,778,169 | 5,222,248 |
Class Z | 5,478,967 | 1,594,167 |
Total | $153,414,832 | $46,152,171 |
11. Share Transactions.
Share transactions for each class were as follows and may contain in-kind transactions, automatic conversions between classes or exchanges between affiliated funds:
Shares | Shares | Dollars | Dollars | |
Year ended February 28, 2022 | Year ended February 28, 2021 | Year ended February 28, 2022 | Year ended February 28, 2021 | |
Consumer Staples Portfolio | ||||
Class A | ||||
Shares sold | 512,430 | 521,136 | $49,258,142 | $43,136,035 |
Reinvestment of distributions | 295,095 | 88,396 | 27,710,518 | 7,517,633 |
Shares redeemed | (514,641) | (837,400) | (49,392,846) | (70,049,187) |
Net increase (decrease) | 292,884 | (227,868) | $27,575,814 | $(19,395,519) |
Class M | ||||
Shares sold | 69,762 | 73,432 | $6,632,101 | $5,865,389 |
Reinvestment of distributions | 68,289 | 20,110 | 6,339,502 | 1,683,104 |
Shares redeemed | (93,262) | (163,378) | (8,856,119) | (13,583,465) |
Net increase (decrease) | 44,789 | (69,836) | $4,115,484 | $(6,034,972) |
Class C | ||||
Shares sold | 80,488 | 141,597 | $7,503,197 | $11,209,401 |
Reinvestment of distributions | 105,499 | 35,029 | 9,608,492 | 2,841,148 |
Shares redeemed | (437,630) | (484,920) | (40,618,649) | (39,991,422) |
Net increase (decrease) | (251,643) | (308,294) | $(23,506,960) | $(25,940,873) |
Consumer Staples | ||||
Shares sold | 3,003,388 | 1,518,738 | $293,188,867 | $126,493,736 |
Reinvestment of distributions | 851,019 | 285,485 | 80,858,070 | 24,629,835 |
Shares redeemed | (1,702,337) | (2,896,609) | (165,649,882) | (243,910,123) |
Net increase (decrease) | 2,152,070 | (1,092,386) | $208,397,055 | $(92,786,552) |
Class I | ||||
Shares sold | 366,907 | 850,081 | $35,605,195 | $68,795,704 |
Reinvestment of distributions | 144,626 | 55,882 | 13,704,710 | 4,825,829 |
Shares redeemed | (439,361) | (1,295,813) | (42,622,622) | (108,862,991) |
Net increase (decrease) | 72,172 | (389,850) | $6,687,283 | $(35,241,458) |
Class Z | ||||
Shares sold | 567,361 | 271,537 | $55,256,648 | $22,735,232 |
Reinvestment of distributions | 53,280 | 17,543 | 5,041,341 | 1,510,349 |
Shares redeemed | (296,902) | (324,611) | (28,764,496) | (28,402,353) |
Net increase (decrease) | 323,739 | (35,531) | $31,533,493 | $(4,156,772) |
12. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a fund. The risk of material loss from such claims is considered remote.
13. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Fund's performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and Shareholders of Consumer Staples Portfolio
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Consumer Staples Portfolio (one of the funds constituting Fidelity Select Portfolios, referred to hereafter as the “Fund”) as of February 28, 2022, the related statement of operations for the year ended February 28, 2022, the statement of changes in net assets for each of the two years in the period ended February 28, 2022, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of February 28, 2022, 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 ended February 28, 2022 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 28, 2022 by correspondence with the custodian 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.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
April 14, 2022
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
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 317 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 if you’re an individual investing directly with Fidelity, call 1-800-835-5092 if you’re a plan sponsor or participant with Fidelity as your recordkeeper or call 1-877-208-0098 on institutional accounts or if you’re an advisor or invest through one.
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. Robert A. Lawrence is an interested person and currently serves as Acting 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. David M. Thomas serves as Lead Independent Trustee 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 high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the fund's Board. 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 FMR 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 FMR, 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, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. 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+
Bettina Doulton (1964)
Year of Election or Appointment: 2020
Trustee
Ms. Doulton also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Doulton served in a variety of positions at Fidelity Investments, including as a managing director of research (2006-2007), portfolio manager to certain Fidelity® funds (1993-2005), equity analyst and portfolio assistant (1990-1993), and research assistant (1987-1990). Ms. Doulton currently owns and operates Phi Builders + Architects and Cellardoor Winery. Previously, Ms. Doulton served as a member of the Board of Brown Capital Management, LLC (2014-2018).
Robert A. Lawrence (1952)
Year of Election or Appointment: 2020
Trustee
Acting Chairman of the Board of Trustees
Mr. Lawrence also serves as Trustee of other funds. Previously, Mr. Lawrence served as a Member of the Advisory Board of certain funds. Prior to his retirement in 2008, Mr. Lawrence served as Vice President of certain Fidelity® funds (2006-2008), Senior Vice President, Head of High Income Division of Fidelity Management & Research Company (investment adviser firm, 2006-2008), and President of Fidelity Strategic Investments (investment adviser firm, 2002-2005).
* 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 FMR.
+ 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+
Thomas P. Bostick (1956)
Year of Election or Appointment: 2021
Trustee
Lieutenant General Bostick also serves as Trustee of other Fidelity® funds. Prior to his retirement, General Bostick (United States Army, Retired) held a variety of positions within the U.S. Army, including Commanding General and Chief of Engineers, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff and Director of Human Resources, U.S. Army (2009-2012). General Bostick currently serves as a member of the Board and Finance and Governance Committees of CSX Corporation (transportation, 2020-present) and a member of the Board and Corporate Governance and Nominating Committee of Perma-Fix Environmental Services, Inc. (nuclear waste management, 2020-present). General Bostick serves as Chief Executive Officer of Bostick Global Strategies, LLC (consulting, 2016-present) and as a member of the Board of HireVue, Inc. (video interview and assessment, 2020-present). Previously, General Bostick served as a Member of the Advisory Board of certain Fidelity® funds (2021), President, Intrexon Bioengineering (2018-2020) and Chief Operating Officer (2017-2020) and Senior Vice President of the Environment Sector (2016-2017) of Intrexon Corporation (biopharmaceutical company).
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 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 currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York and a member of the Board of The Leadership Academy (previously NYC Leadership Academy) (2012-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Vicki L. Fuller (1957)
Year of Election or Appointment: 2020
Trustee
Ms. Fuller also serves as Trustee of other Fidelity® funds. Previously, Ms. Fuller served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of two Blackstone business development companies (2020-present), as a member of the Board of Treliant, LLC (consulting, 2019-present), as a member of the Advisory Board of Ariel Alternatives, LLC (private equity, 2021-present) and as a member of the Board and Chair of the Audit Committee of Gusto, Inc. (software, 2021-present). In addition, Ms. Fuller currently serves as a member of the Board of Roosevelt University (2019-present) and as a member of the Executive Board of New York University’s Stern School of Business. Ms. Fuller previously served as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-2021).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Trustee
Ms. Kampling also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Finance Committee and Governance, Compensation and Nominating Committee of Xcel Energy Inc. (utilities company, 2020-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee and Chair of the Executive Development and Compensation Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a Member of the Advisory Board of certain Fidelity® funds (2020), a member of the Board, Compensation Committee and Executive Committee and Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-2021), a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Thomas A. Kennedy (1955)
Year of Election or Appointment: 2021
Trustee
Mr. Kennedy also serves as Trustee of other Fidelity® funds. Previously, Mr. Kennedy served as a Member of the Advisory Board of certain Fidelity® funds (2020) and held a variety of positions at Raytheon Company (aerospace and defense, 1983-2020), including Chairman and Chief Executive Officer (2014-2020) and Executive Vice President and Chief Operating Officer (2013-2014). Mr. Kennedy currently serves as Executive Chairman of the Board of Directors of Raytheon Technologies Corporation (aerospace and defense, 2020-present). He is also a member of the Rutgers School of Engineering Industry Advisory Board (2011-present) and a member of the UCLA Engineering Dean’s Executive Board (2016-present).
Oscar Munoz (1959)
Year of Election or Appointment: 2021
Trustee
Mr. Munoz also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Munoz served as Executive Chairman (2020-2021), Chief Executive Officer (2015-2020), President (2015-2016) and a member of the Board (2010-2021) of United Airlines Holdings, Inc. Mr. Munoz currently serves as a member of the Board of CBRE Group, Inc. (commercial real estate, 2020-present), a member of the Board of Univision Communications, Inc. (Hispanic media, 2020-present) and a member of the Advisory Board of Salesforce.com, Inc. (cloud-based software, 2020-present). Previously, Mr. Munoz served as a Member of the Advisory Board of certain Fidelity® funds (2021).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Lead Independent Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as a member of the Board of Fortune Brands Home and Security (home and security products, 2004-present) and as Director (2013-present) and Non-Executive Chairman of the Board (2022-present) of Interpublic Group of Companies, Inc. (marketing communication).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Trustee
Ms. Tomasky also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Executive Committee, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present) and as a member of the Board of its subsidiary company, Public Service Electric and Gas Co. (2021-present). In addition, Ms. Tomasky currently serves as a member (2009-present) and President (2020-present) of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board and Kenyon in the World Committee of Kenyon College (2016-present). Previously, Ms. Tomasky served as a Member of the Advisory Board of certain Fidelity® funds (2020), as a member of the Board of the Columbus Regional Airport Authority (2007-2020), as a member of the Board (2011-2018) and Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee of other Fidelity® funds. Previously, Mr. Wiley served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley also previously served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018), a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018) and a member of the Board of High Point Resources (exploration and production, 2005-2020).
+ 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 (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as an officer of other funds. Mr. Brown serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
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 Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as an officer of other funds. Mr. Davis serves as Assistant Treasurer of FIMM, LLC (2021-present), FMR Capital, Inc. (2017-present), FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); 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).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2017-present). Previously, Ms. Del Prato served as President and Treasurer of The North Carolina Capital Management Trust: Cash Portfolio and Term Portfolio (2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present); Secretary of FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); and Assistant Secretary of FIMM, LLC (2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); 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).
Jason P. Pogorelec (1975)
Year of Election or Appointment: 2020
Chief Compliance Officer
Mr. Pogorelec also serves as Chief Compliance Officer of other funds. Mr. Pogorelec is a senior Vice President of Asset Management Compliance for Fidelity Investments and is an employee of Fidelity Investments (2006-present). Previously, Mr. Pogorelec served as Vice President, Associate General Counsel for Fidelity Investments (2010-2020) and Assistant Secretary of certain Fidelity funds (2015-2020).
Brett Segaloff (1972)
Year of Election or Appointment: 2021
Anti-Money Laundering (AML) Officer
Mr. Segaloff also serves as an AML Officer of other funds and other related entities. He is Director, Anti-Money Laundering (2007-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments (1996-present).
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), 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 Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as an officer of other funds. Mr. Wegmann serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2011-present). Previously, Mr. Wegmann served as Assistant Treasurer of certain Fidelity® funds (2019-2021).
Shareholder Expense Example
As a shareholder, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or redemption proceeds, as applicable and (2) ongoing costs, which generally include 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 a 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, 2021 to February 28, 2022).
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 for a class/Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If any fund is a shareholder of any underlying mutual funds or exchange-traded funds (ETFs) (the Underlying Funds), such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses incurred presented in the table. These fees and expenses are not included in the 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 actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the 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. If any fund is a shareholder of any Underlying Funds, such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses as presented in the table. These fees and expenses are not included in the 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, 2021 | Ending Account Value February 28, 2022 | Expenses Paid During Period-B September 1, 2021 to February 28, 2022 | |
Consumer Staples Portfolio | ||||
Class A | 1.01% | |||
Actual | $1,000.00 | $1,040.90 | $5.11 | |
Hypothetical-C | $1,000.00 | $1,019.79 | $5.06 | |
Class M | 1.27% | |||
Actual | $1,000.00 | $1,039.60 | $6.42 | |
Hypothetical-C | $1,000.00 | $1,018.50 | $6.36 | |
Class C | 1.76% | |||
Actual | $1,000.00 | $1,037.00 | $8.89 | |
Hypothetical-C | $1,000.00 | $1,016.07 | $8.80 | |
Consumer Staples | .72% | |||
Actual | $1,000.00 | $1,042.40 | $3.65 | |
Hypothetical-C | $1,000.00 | $1,021.22 | $3.61 | |
Class I | .74% | |||
Actual | $1,000.00 | $1,042.30 | $3.75 | |
Hypothetical-C | $1,000.00 | $1,021.12 | $3.71 | |
Class Z | .61% | |||
Actual | $1,000.00 | $1,043.00 | $3.09 | |
Hypothetical-C | $1,000.00 | $1,021.77 | $3.06 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/ 365 (to reflect the one-half year period). The fees and expenses of any Underlying Funds are not included in each annualized expense ratio.
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 | 04/11/2022 | 04/08/2022 | $0.131 | $1.529 |
Class M | 04/11/2022 | 04/08/2022 | $0.075 | $1.529 |
Class C | 04/11/2022 | 04/08/2022 | $0.000 | $1.529 |
Consumer Staples | 04/11/2022 | 04/08/2022 | $0.192 | $1.529 |
Class I | 04/11/2022 | 04/08/2022 | $0.188 | $1.529 |
Class Z | 04/11/2022 | 04/08/2022 | $0.214 | $1.529 |
The fund hereby designates as a capital gain dividend with respect to the taxable year ended February 28, 2022, $71,454,037, or, if subsequently determined to be different, the net capital gain of such year.
The fund designates 100% of the short-term capital gain dividends distributed in April and December, respectively during the fiscal year as qualifying to be taxed as short-term capital gain dividends for nonresident alien shareholders.
Class A designates 42% and 74%; Class M designates 44% and 79%; Class C designates 47% and 96%; Consumer Staples designates 41% and 69%; Class I designates 41% and 69%; and Class Z designates 40% and 67%; 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 designates 49% and 76%; Class M designates 51% and 81%; Class C designates 55% and 99%; Consumer Staples designates 48% and 70%; Class I designates 48% and 71%; and Class Z designates 47% and 68%; of the dividends distributed in April and December, respectively 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.
Class A, Class M, Class C, Consumer Staples, Class I, and Class Z designates 1% of the dividends distributed in April during the fiscal year as a section 199A dividend.
The fund will notify shareholders in January 2023 of amounts for use in preparing 2022 income tax returns.
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Fund has adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage the Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. The Fund’s Board of Trustees (the Board) has designated the Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2020 through November 30, 2021. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
SELCS-ANN-0422
1.846042.115
Fidelity® Select Portfolios®
Utilities Sector
Utilities Portfolio
February 28, 2022
![Fidelity Investments](https://capedge.com/proxy/N-CSR/0001379491-22-001658/fid_sun.jpg)
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Contents
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. © 2022 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-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT 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.
Note to Shareholders:
Early in 2020, the outbreak and spread of COVID-19 emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread. The pandemic prompted a number of measures to limit the spread of COVID-19, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. To help stem the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
In general, the overall impact of the pandemic lessened in 2021, amid a resilient economy and widespread distribution of three COVID-19 vaccines granted emergency use authorization from the U.S. Food and Drug Administration (FDA) early in the year. Still, the situation remains dynamic, and the extent and duration of its influence on financial markets and the economy is highly uncertain, due in part to a recent spike in cases based on highly contagious variants of the coronavirus.
Extreme events such as the COVID-19 crisis are exogenous shocks that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets. Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we continue to take extra steps to be responsive to customer needs. We encourage you to visit us online, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Utilities Portfolio | 19.19% | 10.45% | 11.18% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Utilities Portfolio on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789797335_740.jpg)
Period Ending Values | ||
$28,866 | Utilities Portfolio | |
$39,037 | S&P 500® Index |
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Douglas Simmons: For the fiscal year ending February 28, 2022, the fund gained 19.19%, roughly in line with the 19.24% advance of the MSCI US IMI Utilities 25/50 Index, but outperforming the benchmark, the broad-based S&P 500® index. Versus the sector index, security selection added value, especially in the electric utilities category, whereas overall market selection detracted. Choices in electric utilities and multi-utilities contributed. Looking at individual stocks, overweighting electric utility Exelon (+62%) added more value than any other fund position. An outsized stake in multi-utility CenterPoint Energy (+44%) and avoiding electric utility and index component Eversource Energy (+6%) also contributed on a relative basis. Conversely, an overweighting and stock selection among independent power producers & energy traders detracted from the fund’s relative return, as did an overweighting in renewable electricity. Overweighting independent power producer & energy trader AES, which returned -18% the past 12 months, detracted. We continued to own an overweighted stake in AES at period’s end. Overweightings in renewable electricity provider Sunnova Energy International (-55%) and electric utility PG&E (+8%) hurt as well. For the period, we slightly increased the fund’s stake in multi-utilities and slightly reduced its holdings among electric utilities, while maintaining overweighted exposure to independent power producers & energy traders.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 October 1, 2021, Fidelity increased dividend distribution frequency for the fund because of its focus on industries that are associated with dividend-paying companies. Dividend distributions will be paid four times a year: April, July, October, and December. Quarterly dividend distributions will commence in April 2022. Please note that there are no changes to the frequency of capital gain distributions.Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
NextEra Energy, Inc. | 16.5 |
Southern Co. | 8.2 |
Exelon Corp. | 7.9 |
Sempra Energy | 7.8 |
PG&E Corp. | 5.5 |
American Electric Power Co., Inc. | 4.8 |
FirstEnergy Corp. | 4.7 |
Public Service Enterprise Group, Inc. | 4.7 |
Edison International | 4.7 |
Dominion Energy, Inc. | 4.6 |
69.4 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Electric Utilities | 61.9% | |
Multi-Utilities | 24.0% | |
Independent Power and Renewable Electricity Producers | 9.9% | |
Construction & Engineering | 0.8% | |
Electrical Equipment | 0.6% | |
All Others* | 2.8% |
* Includes short-term investments and net other assets (liabilities).
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 97.5% | |||
Shares | Value | ||
Construction & Engineering - 0.8% | |||
Construction & Engineering - 0.8% | |||
Quanta Services, Inc. | 83,100 | $9,052,914 | |
Electric Utilities - 61.9% | |||
Electric Utilities - 61.9% | |||
American Electric Power Co., Inc. | 563,750 | 51,103,938 | |
Constellation Energy Corp. | 813,663 | 37,412,225 | |
Duke Energy Corp. | 88,812 | 8,917,613 | |
Edison International | 794,899 | 50,412,495 | |
Entergy Corp. | 238,240 | 25,065,230 | |
Exelon Corp. | 1,986,689 | 84,553,484 | |
FirstEnergy Corp. | 1,217,092 | 50,935,300 | |
NextEra Energy, Inc. | 2,256,088 | 176,584,008 | |
OGE Energy Corp. | 380,300 | 14,280,265 | |
PG&E Corp. (a) | 5,194,566 | 59,062,215 | |
Southern Co. | 1,353,377 | 87,658,228 | |
Xcel Energy, Inc. | 265,100 | 17,849,183 | |
663,834,184 | |||
Electrical Equipment - 0.6% | |||
Electrical Components & Equipment - 0.6% | |||
Plug Power, Inc. (a)(b) | 236,200 | 5,973,498 | |
Independent Power and Renewable Electricity Producers - 9.9% | |||
Independent Power Producers & Energy Traders - 8.0% | |||
Clearway Energy, Inc.: | |||
Class A (b) | 119,624 | 3,659,298 | |
Class C | 70,991 | 2,371,099 | |
The AES Corp. | 2,276,115 | 48,321,921 | |
Vistra Corp. | 1,393,173 | 31,792,208 | |
86,144,526 | |||
Renewable Electricity - 1.9% | |||
NextEra Energy Partners LP (b) | 203,424 | 15,869,106 | |
Sunnova Energy International, Inc. (a)(b) | 227,300 | 4,580,095 | |
20,449,201 | |||
TOTAL INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS | 106,593,727 | ||
Multi-Utilities - 24.0% | |||
Multi-Utilities - 24.0% | |||
CenterPoint Energy, Inc. | 1,399,408 | 38,273,809 | |
Dominion Energy, Inc. | 622,560 | 49,512,197 | |
NiSource, Inc. | 1,216,043 | 35,180,124 | |
Public Service Enterprise Group, Inc. | 777,905 | 50,431,581 | |
Sempra Energy | 578,108 | 83,374,736 | |
256,772,447 | |||
Oil, Gas & Consumable Fuels - 0.3% | |||
Oil & Gas Storage & Transport - 0.3% | |||
Energy Transfer LP | 311,300 | 3,156,582 | |
TOTAL COMMON STOCKS | |||
(Cost $811,313,788) | 1,045,383,352 | ||
Money Market Funds - 3.5% | |||
Fidelity Cash Central Fund 0.07% (c) | 15,710,239 | 15,713,381 | |
Fidelity Securities Lending Cash Central Fund 0.07% (c)(d) | 21,481,827 | 21,483,975 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $37,197,356) | 37,197,356 | ||
TOTAL INVESTMENT IN SECURITIES - 101.0% | |||
(Cost $848,511,144) | 1,082,580,708 | ||
NET OTHER ASSETS (LIABILITIES) - (1.0)% | (10,525,112) | ||
NET ASSETS - 100% | $1,072,055,596 |
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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $33,119,837 | $215,568,794 | $232,975,250 | $7,338 | $-- | $-- | $15,713,381 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 57,500 | 224,043,336 | 202,616,861 | 11,739 | -- | -- | 21,483,975 | 0.1% |
Total | $33,177,337 | $439,612,130 | $435,592,111 | $19,077 | $-- | $-- | $37,197,356 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $1,045,383,352 | $1,045,383,352 | $-- | $-- |
Money Market Funds | 37,197,356 | 37,197,356 | -- | -- |
Total Investments in Securities: | $1,082,580,708 | $1,082,580,708 | $-- | $-- |
See accompanying notes which are an integral part of the financial statements.
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $22,104,601) — See accompanying schedule: Unaffiliated issuers (cost $811,313,788) | $1,045,383,352 | |
Fidelity Central Funds (cost $37,197,356) | 37,197,356 | |
Total Investment in Securities (cost $848,511,144) | $1,082,580,708 | |
Receivable for investments sold | 6,753,512 | |
Receivable for fund shares sold | 1,617,614 | |
Dividends receivable | 4,224,047 | |
Distributions receivable from Fidelity Central Funds | 1,666 | |
Prepaid expenses | 3,316 | |
Other receivables | 5,948 | |
Total assets | 1,095,186,811 | |
Liabilities | ||
Payable for investments purchased | $47,816 | |
Payable for fund shares redeemed | 930,501 | |
Accrued management fee | 461,407 | |
Other affiliated payables | 173,466 | |
Other payables and accrued expenses | 34,050 | |
Collateral on securities loaned | 21,483,975 | |
Total liabilities | 23,131,215 | |
Net Assets | $1,072,055,596 | |
Net Assets consist of: | ||
Paid in capital | $815,465,848 | |
Total accumulated earnings (loss) | 256,589,748 | |
Net Assets | $1,072,055,596 | |
Net Asset Value, offering price and redemption price per share ($1,072,055,596 ÷ 10,679,529 shares) | $100.38 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $27,089,762 | |
Income from Fidelity Central Funds (including $11,739 from security lending) | 19,077 | |
Total income | 27,108,839 | |
Expenses | ||
Management fee | $5,277,822 | |
Transfer agent fees | 1,677,669 | |
Accounting fees | 333,635 | |
Custodian fees and expenses | 6,131 | |
Independent trustees' fees and expenses | 3,607 | |
Registration fees | 58,021 | |
Audit | 39,632 | |
Legal | 1,556 | |
Miscellaneous | 5,549 | |
Total expenses before reductions | 7,403,622 | |
Expense reductions | (22,978) | |
Total expenses after reductions | 7,380,644 | |
Net investment income (loss) | 19,728,195 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 38,512,444 | |
Total net realized gain (loss) | 38,512,444 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | 110,783,166 | |
Assets and liabilities in foreign currencies | (1,349) | |
Total change in net unrealized appreciation (depreciation) | 110,781,817 | |
Net gain (loss) | 149,294,261 | |
Net increase (decrease) in net assets resulting from operations | $169,022,456 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $19,728,195 | $18,646,908 |
Net realized gain (loss) | 38,512,444 | 144,321 |
Change in net unrealized appreciation (depreciation) | 110,781,817 | (44,461,017) |
Net increase (decrease) in net assets resulting from operations | 169,022,456 | (25,669,788) |
Distributions to shareholders | (28,337,938) | (52,597,101) |
Share transactions | ||
Proceeds from sales of shares | 248,500,596 | 248,831,567 |
Reinvestment of distributions | 26,334,666 | 49,416,895 |
Cost of shares redeemed | (239,748,839) | (570,705,990) |
Net increase (decrease) in net assets resulting from share transactions | 35,086,423 | (272,457,528) |
Total increase (decrease) in net assets | 175,770,941 | (350,724,417) |
Net Assets | ||
Beginning of period | 896,284,655 | 1,247,009,072 |
End of period | $1,072,055,596 | $896,284,655 |
Other Information | ||
Shares | ||
Sold | 2,524,118 | 2,920,974 |
Issued in reinvestment of distributions | 259,200 | 585,913 |
Redeemed | (2,459,097) | (6,824,868) |
Net increase (decrease) | 324,221 | (3,317,981) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Utilities Portfolio
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $86.55 | $91.20 | $85.32 | $76.75 | $77.05 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | 1.92 | 1.61 | 2.09 | 2.06 | 1.62 |
Net realized and unrealized gain (loss) | 14.72 | (1.81) | 5.99 | 13.35 | 2.56 |
Total from investment operations | 16.64 | (.20) | 8.08 | 15.41 | 4.18 |
Distributions from net investment income | (1.71) | (2.12) | (1.94) | (1.37) | (1.29) |
Distributions from net realized gain | (1.10) | (2.34) | (.26) | (5.46) | (3.19) |
Total distributions | (2.81) | (4.45)D | (2.20) | (6.84)D | (4.48) |
Redemption fees added to paid in capitalB | – | – | – | – | –E |
Net asset value, end of period | $100.38 | $86.55 | $91.20 | $85.32 | $76.75 |
Total ReturnF | 19.19% | (.05)% | 9.34% | 20.17% | 4.99% |
Ratios to Average Net AssetsC,G,H | |||||
Expenses before reductions | .74% | .76% | .75% | .78% | .78% |
Expenses net of fee waivers, if any | .73% | .76% | .75% | .78% | .78% |
Expenses net of all reductions | .73% | .75% | .74% | .76% | .77% |
Net investment income (loss) | 1.96% | 1.88% | 2.25% | 2.45% | 2.00% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $1,072,056 | $896,285 | $1,247,009 | $1,040,763 | $716,979 |
Portfolio turnover rateI | 37% | 64% | 65%J | 97%J | 66%J |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Total distributions per share do not sum due to rounding.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
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, 2022
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.
Funds may 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
Based on its investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the investing fund. These strategies are consistent with the investment objectives of the investing fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the investing fund.
Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio(a) |
Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | Less than .005% |
(a) Expenses expressed as a percentage of average net assets and are as of each underlying Central Fund's most recent annual or semi-annual shareholder report.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which contain the significant accounting policies (including investment valuation policies) of those funds, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission website or upon request.
3. Significant Accounting Policies.
The Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies. 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 Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. 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 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 – Unadjusted 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. 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, 2022 is included at the end of the Fund's Schedule of Investments.
Foreign Currency. Certain 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 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 include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable.
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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. 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, 2022, 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 capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows:
Gross unrealized appreciation | $243,277,648 |
Gross unrealized depreciation | (12,233,808) |
Net unrealized appreciation (depreciation) | $231,043,840 |
Tax Cost | $851,536,868 |
The tax-based components of distributable earnings as of period end were as follows:
Undistributed ordinary income | $416,391 |
Undistributed long-term capital gain | $25,129,485 |
Net unrealized appreciation (depreciation) on securities and other investments | $231,043,872 |
The tax character of distributions paid was as follows:
February 28, 2022 | February 28, 2021 | |
Ordinary Income | $17,236,478 | $ 22,682,991 |
Long-term Capital Gains | 11,101,460 | 29,914,110 |
Total | $28,337,938 | $ 52,597,101 |
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities and in-kind, as applicable, are noted in the table below.
Purchases ($) | Sales ($) | |
Utilities Portfolio | 409,608,506 | 368,696,199 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company 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 .22% during the period. The group fee rate is based upon the monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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 .52% of the Fund's average net assets.
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (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 .17% of average net assets.
Accounting 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. For the period, the fees were equivalent to the following annual rates:
% of Average Net Assets | |
Utilities Portfolio | .03 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 | |
Utilities Portfolio | $6,798 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note and are noted in the table below.
Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
Utilities Portfolio | 23,165,815 | 3,911,740 | (335,353) |
Other. During the period, the investment adviser reimbursed the Fund for certain losses as follows:
Amount ($) | |
Utilities Portfolio | 30,732 |
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 listed below. During the period, there were no borrowings on this line of credit.
Amount | |
Utilities Portfolio | $1,679 |
7. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the 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. Affiliated security lending activity, if any, was as follows:
Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
Utilities Portfolio | $1,183 | $– | $– |
8. Expense Reductions.
In addition, during the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses in the amount of $22,978.
9. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a fund. The risk of material loss from such claims is considered remote.
10. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Fund's performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and Shareholders of Utilities Portfolio
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Utilities Portfolio (one of the funds constituting Fidelity Select Portfolios, referred to hereafter as the “Fund”) as of February 28, 2022, the related statement of operations for the year ended February 28, 2022, the statement of changes in net assets for each of the two years in the period ended February 28, 2022, including the related notes, and the financial highlights for each of the five years in the period ended February 28, 2022 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of February 28, 2022, 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 ended February 28, 2022 and the financial highlights for each of the five years in the period ended February 28, 2022 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 28, 2022 by correspondence with the custodian 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.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
April 14, 2022
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
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 317 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. Robert A. Lawrence is an interested person and currently serves as Acting 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. David M. Thomas serves as Lead Independent Trustee 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 high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the fund's Board. 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 FMR 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 FMR, 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, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the fund's Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the fund's Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. 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+
Bettina Doulton (1964)
Year of Election or Appointment: 2020
Trustee
Ms. Doulton also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Doulton served in a variety of positions at Fidelity Investments, including as a managing director of research (2006-2007), portfolio manager to certain Fidelity® funds (1993-2005), equity analyst and portfolio assistant (1990-1993), and research assistant (1987-1990). Ms. Doulton currently owns and operates Phi Builders + Architects and Cellardoor Winery. Previously, Ms. Doulton served as a member of the Board of Brown Capital Management, LLC (2014-2018).
Robert A. Lawrence (1952)
Year of Election or Appointment: 2020
Trustee
Acting Chairman of the Board of Trustees
Mr. Lawrence also serves as Trustee of other funds. Previously, Mr. Lawrence served as a Member of the Advisory Board of certain funds. Prior to his retirement in 2008, Mr. Lawrence served as Vice President of certain Fidelity® funds (2006-2008), Senior Vice President, Head of High Income Division of Fidelity Management & Research Company (investment adviser firm, 2006-2008), and President of Fidelity Strategic Investments (investment adviser firm, 2002-2005).
* 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 FMR.
+ 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+
Thomas P. Bostick (1956)
Year of Election or Appointment: 2021
Trustee
Lieutenant General Bostick also serves as Trustee of other Fidelity® funds. Prior to his retirement, General Bostick (United States Army, Retired) held a variety of positions within the U.S. Army, including Commanding General and Chief of Engineers, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff and Director of Human Resources, U.S. Army (2009-2012). General Bostick currently serves as a member of the Board and Finance and Governance Committees of CSX Corporation (transportation, 2020-present) and a member of the Board and Corporate Governance and Nominating Committee of Perma-Fix Environmental Services, Inc. (nuclear waste management, 2020-present). General Bostick serves as Chief Executive Officer of Bostick Global Strategies, LLC (consulting, 2016-present) and as a member of the Board of HireVue, Inc. (video interview and assessment, 2020-present). Previously, General Bostick served as a Member of the Advisory Board of certain Fidelity® funds (2021), President, Intrexon Bioengineering (2018-2020) and Chief Operating Officer (2017-2020) and Senior Vice President of the Environment Sector (2016-2017) of Intrexon Corporation (biopharmaceutical company).
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 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 currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York and a member of the Board of The Leadership Academy (previously NYC Leadership Academy) (2012-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Vicki L. Fuller (1957)
Year of Election or Appointment: 2020
Trustee
Ms. Fuller also serves as Trustee of other Fidelity® funds. Previously, Ms. Fuller served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of two Blackstone business development companies (2020-present), as a member of the Board of Treliant, LLC (consulting, 2019-present), as a member of the Advisory Board of Ariel Alternatives, LLC (private equity, 2021-present) and as a member of the Board and Chair of the Audit Committee of Gusto, Inc. (software, 2021-present). In addition, Ms. Fuller currently serves as a member of the Board of Roosevelt University (2019-present) and as a member of the Executive Board of New York University’s Stern School of Business. Ms. Fuller previously served as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-2021).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Trustee
Ms. Kampling also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Finance Committee and Governance, Compensation and Nominating Committee of Xcel Energy Inc. (utilities company, 2020-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee and Chair of the Executive Development and Compensation Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a Member of the Advisory Board of certain Fidelity® funds (2020), a member of the Board, Compensation Committee and Executive Committee and Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-2021), a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Thomas A. Kennedy (1955)
Year of Election or Appointment: 2021
Trustee
Mr. Kennedy also serves as Trustee of other Fidelity® funds. Previously, Mr. Kennedy served as a Member of the Advisory Board of certain Fidelity® funds (2020) and held a variety of positions at Raytheon Company (aerospace and defense, 1983-2020), including Chairman and Chief Executive Officer (2014-2020) and Executive Vice President and Chief Operating Officer (2013-2014). Mr. Kennedy currently serves as Executive Chairman of the Board of Directors of Raytheon Technologies Corporation (aerospace and defense, 2020-present). He is also a member of the Rutgers School of Engineering Industry Advisory Board (2011-present) and a member of the UCLA Engineering Dean’s Executive Board (2016-present).
Oscar Munoz (1959)
Year of Election or Appointment: 2021
Trustee
Mr. Munoz also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Munoz served as Executive Chairman (2020-2021), Chief Executive Officer (2015-2020), President (2015-2016) and a member of the Board (2010-2021) of United Airlines Holdings, Inc. Mr. Munoz currently serves as a member of the Board of CBRE Group, Inc. (commercial real estate, 2020-present), a member of the Board of Univision Communications, Inc. (Hispanic media, 2020-present) and a member of the Advisory Board of Salesforce.com, Inc. (cloud-based software, 2020-present). Previously, Mr. Munoz served as a Member of the Advisory Board of certain Fidelity® funds (2021).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Lead Independent Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as a member of the Board of Fortune Brands Home and Security (home and security products, 2004-present) and as Director (2013-present) and Non-Executive Chairman of the Board (2022-present) of Interpublic Group of Companies, Inc. (marketing communication).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Trustee
Ms. Tomasky also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Executive Committee, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present) and as a member of the Board of its subsidiary company, Public Service Electric and Gas Co. (2021-present). In addition, Ms. Tomasky currently serves as a member (2009-present) and President (2020-present) of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board and Kenyon in the World Committee of Kenyon College (2016-present). Previously, Ms. Tomasky served as a Member of the Advisory Board of certain Fidelity® funds (2020), as a member of the Board of the Columbus Regional Airport Authority (2007-2020), as a member of the Board (2011-2018) and Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee of other Fidelity® funds. Previously, Mr. Wiley served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley also previously served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018), a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018) and a member of the Board of High Point Resources (exploration and production, 2005-2020).
+ 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 (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as an officer of other funds. Mr. Brown serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
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 Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as an officer of other funds. Mr. Davis serves as Assistant Treasurer of FIMM, LLC (2021-present), FMR Capital, Inc. (2017-present), FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); 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).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2017-present). Previously, Ms. Del Prato served as President and Treasurer of The North Carolina Capital Management Trust: Cash Portfolio and Term Portfolio (2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present); Secretary of FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); and Assistant Secretary of FIMM, LLC (2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); 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).
Jason P. Pogorelec (1975)
Year of Election or Appointment: 2020
Chief Compliance Officer
Mr. Pogorelec also serves as Chief Compliance Officer of other funds. Mr. Pogorelec is a senior Vice President of Asset Management Compliance for Fidelity Investments and is an employee of Fidelity Investments (2006-present). Previously, Mr. Pogorelec served as Vice President, Associate General Counsel for Fidelity Investments (2010-2020) and Assistant Secretary of certain Fidelity funds (2015-2020).
Brett Segaloff (1972)
Year of Election or Appointment: 2021
Anti-Money Laundering (AML) Officer
Mr. Segaloff also serves as an AML Officer of other funds and other related entities. He is Director, Anti-Money Laundering (2007-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments (1996-present).
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), 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 Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as an officer of other funds. Mr. Wegmann serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2011-present). Previously, Mr. Wegmann served as Assistant Treasurer of certain Fidelity® funds (2019-2021).
Shareholder Expense Example
As a shareholder, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or redemption proceeds, as applicable and (2) ongoing costs, which generally include 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 a 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, 2021 to February 28, 2022).
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 for a class/Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If any fund is a shareholder of any underlying mutual funds or exchange-traded funds (ETFs) (the Underlying Funds), such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses incurred presented in the table. These fees and expenses are not included in the 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 actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the 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. If any fund is a shareholder of any Underlying Funds, such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses as presented in the table. These fees and expenses are not included in the 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, 2021 | Ending Account Value February 28, 2022 | Expenses Paid During Period-B September 1, 2021 to February 28, 2022 | |
Utilities Portfolio | .73% | |||
Actual | $1,000.00 | $1,034.20 | $3.68 | |
Hypothetical-C | $1,000.00 | $1,021.17 | $3.66 |
A Annualized expense ratio reflects expenses net of applicable fee waivers.
B Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/ 365 (to reflect the one-half year period). The fees and expenses of any Underlying Funds are not included in each annualized expense ratio.
C 5% return per year before expenses
Distributions (Unaudited)
The Board of Trustees of Utilities Portfolio voted to pay on February 11, 2022, to shareholders of record at the opening of business on February 8, 2022, a distribution of $2.225 per share derived from capital gains realized from sales of portfolio securities and a dividend of $0.152 per share from net investment income.
The fund hereby designates as a capital gain dividend with respect to the taxable year ended February 28, 2022, $37,128,082, or, if subsequently determined to be different, the net capital gain of such year.
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 2023 of amounts for use in preparing 2022 income tax returns.
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Fund has adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage the Fund's liquidity risk and to comply with the requirements of the Liquidity Rule. The Fund's Board of Trustees (the Board) has designated the Fund's investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund's liquidity risk based on a variety of factors including (1) the Fund's investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund's prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund's portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2020 through November 30, 2021. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
SELUTL-ANN-0422
1.813626.117
Fidelity® Environment and Alternative Energy Fund (formerly Environment and Alternative Energy Portfolio)
Fidelity® Natural Resources Fund (formerly Natural Resources Portfolio)
February 28, 2022
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Contents
Fidelity® Environment and Alternative Energy Fund | |
Fidelity® Natural Resources Fund | |
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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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-PORT. Forms N-PORT are available on the SEC’s web site at http://www.sec.gov. A fund's Forms N-PORT 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.
Note to Shareholders:
Early in 2020, the outbreak and spread of COVID-19 emerged as a public health emergency that had a major influence on financial markets, primarily based on its impact on the global economy and corporate earnings. On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, citing sustained risk of further global spread. The pandemic prompted a number of measures to limit the spread of COVID-19, including travel and border restrictions, quarantines, and restrictions on large gatherings. In turn, these resulted in lower consumer activity, diminished demand for a wide range of products and services, disruption in manufacturing and supply chains, and – given the wide variability in outcomes regarding the outbreak – significant market uncertainty and volatility. To help stem the turmoil, the U.S. government took unprecedented action – in concert with the U.S. Federal Reserve and central banks around the world – to help support consumers, businesses, and the broader economy, and to limit disruption to the financial system.
In general, the overall impact of the pandemic lessened in 2021, amid a resilient economy and widespread distribution of three COVID-19 vaccines granted emergency use authorization from the U.S. Food and Drug Administration (FDA) early in the year. Still, the situation remains dynamic, and the extent and duration of its influence on financial markets and the economy is highly uncertain, due in part to a recent spike in cases based on highly contagious variants of the coronavirus.
Extreme events such as the COVID-19 crisis are exogenous shocks that can have significant adverse effects on mutual funds and their investments. Although multiple asset classes may be affected by market disruption, the duration and impact may not be the same for all types of assets. Fidelity is committed to helping you stay informed amid news about COVID-19 and during increased market volatility, and we continue to take extra steps to be responsive to customer needs. We encourage you to visit us online, where we offer ongoing updates, commentary, and analysis on the markets and our funds.
Fidelity® Environment and Alternative Energy 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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Fidelity® Environment and Alternative Energy Fund | 11.02% | 12.23% | 12.16% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity® Environment and Alternative Energy Fund on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789799510_740.jpg)
Period Ending Values | ||
$31,492 | Fidelity® Environment and Alternative Energy Fund | |
$39,037 | S&P 500® Index |
Fidelity® Environment and Alternative Energy Fund
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Co-Managers Asher Anolic and Julia Pei: For the fiscal year, the fund gained 11.02%, roughly in line with the 11.23% advance of the FTSE EO & Alternative Energy Index, but underperforming the broad-based S&P 500® index. Versus the industry index, market selection was the primary contributor, especially an overweighting in the steel group. Security selection in construction & engineering and an underweighting in industrial conglomerates also helped. The biggest individual relative contributor was an overweight position in Steel Dynamics (+64%), followed by outsized stakes in Honeywell International (+16%) and Comfort Systems USA (+29%). All three stocks were not held by the fund at period end. Conversely, the largest detractor from performance versus the industry index was security selection in renewable electricity. Also hampering the fund's relative performance was an underweighting in industrial gases and environmental & facilities services. The biggest individual relative detractor was an overweight position in Cummins (-18%). Cummins was among our largest holdings this period. Outsized stakes in Xylem (-34%) and Innospec (-12%), two positions that were sold the past 12 months, also hurt. Additionally, the fund's foreign holdings detracted overall, hampered in part by a broadly stronger U.S. dollar. Notable changes in positioning include increased exposure to the life sciences tools & services subindustry and a lower allocation to electrical components & equipment.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: Following Board approval in April 2021, Fidelity® Select Environment and Alternative Energy Portfolio was renamed Fidelity® Environment and Alternative Energy Fund, effective May 1, 2021, to better align with Fidelity's other thematic offerings. On July 12, 2021, Asher Anolic assumed portfolio management responsibilities for the fund, succeeding Kevin Walenta. On August 27, 2021, Julia Pei was appointed co-portfolio manager, joining Asher.Fidelity® Environment and Alternative Energy Fund
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
Microsoft Corp. | 13.0 |
Tesla, Inc. | 10.4 |
Danaher Corp. | 6.7 |
Linde PLC | 5.7 |
Prologis (REIT), Inc. | 5.1 |
Analog Devices, Inc. | 3.8 |
Eaton Corp. PLC | 3.5 |
NextEra Energy, Inc. | 3.0 |
DuPont de Nemours, Inc. | 2.5 |
Xcel Energy, Inc. | 2.3 |
56.0 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Software | 14.0% | |
Automobiles | 11.2% | |
Semiconductors & Semiconductor Equipment | 11.0% | |
Chemicals | 10.5% | |
Electrical Equipment | 8.4% | |
All Others* | 44.9% |
* Includes short-term investments and net other assets (liabilities).
Fidelity® Environment and Alternative Energy Fund
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 99.7% | |||
Shares | Value | ||
Automobiles - 11.2% | |||
Automobile Manufacturers - 11.2% | |||
Tesla, Inc. (a) | 90,270 | $78,573,716 | |
XPeng, Inc. ADR (a) | 158,450 | 5,762,827 | |
84,336,543 | |||
Building Products - 6.1% | |||
Building Products - 6.1% | |||
Johnson Controls International PLC | 249,620 | 16,215,315 | |
Kingspan Group PLC (Ireland) | 34,200 | 3,340,049 | |
Owens Corning | 136,990 | 12,766,098 | |
Trane Technologies PLC | 92,530 | 14,243,143 | |
46,564,605 | |||
Capital Markets - 0.9% | |||
Financial Exchanges & Data - 0.9% | |||
Intercontinental Exchange, Inc. | 52,380 | 6,710,926 | |
Chemicals - 10.5% | |||
Industrial Gases - 5.7% | |||
Linde PLC | 145,990 | 42,810,108 | |
Specialty Chemicals - 4.8% | |||
DuPont de Nemours, Inc. | 239,980 | 18,567,253 | |
Eastman Chemical Co. | 34,840 | 4,127,495 | |
Koninklijke DSM NV | 73,030 | 13,712,415 | |
36,407,163 | |||
TOTAL CHEMICALS | 79,217,271 | ||
Commercial Services & Supplies - 1.5% | |||
Diversified Support Services - 0.1% | |||
Smart Metering Systems PLC | 118,400 | 1,139,770 | |
Environmental & Facility Services - 1.4% | |||
Aker Carbon Capture A/S (a) | 1,218,500 | 2,346,508 | |
Tetra Tech, Inc. | 49,640 | 7,881,343 | |
10,227,851 | |||
TOTAL COMMERCIAL SERVICES & SUPPLIES | 11,367,621 | ||
Construction & Engineering - 0.6% | |||
Construction & Engineering - 0.6% | |||
Quanta Services, Inc. | 39,200 | 4,270,448 | |
Containers & Packaging - 2.2% | |||
Metal & Glass Containers - 2.2% | |||
Ball Corp. | 182,050 | 16,337,167 | |
Electric Utilities - 7.9% | |||
Electric Utilities - 7.9% | |||
NextEra Energy, Inc. | 293,150 | 22,944,851 | |
ORSTED A/S (b) | 86,900 | 11,246,086 | |
Verbund AG | 67,710 | 8,166,953 | |
Xcel Energy, Inc. | 256,480 | 17,268,798 | |
59,626,688 | |||
Electrical Equipment - 8.4% | |||
Electrical Components & Equipment - 6.9% | |||
Acuity Brands, Inc. | 65,980 | 12,032,773 | |
Ceres Power Holdings PLC (a) | 214,290 | 2,009,549 | |
Contemporary Amperex Technology Co. Ltd. | 53,200 | 4,497,326 | |
Eaton Corp. PLC | 174,090 | 26,860,346 | |
Fluence Energy, Inc. (c) | 64,830 | 877,150 | |
Sunrun, Inc. (a) | 174,170 | 4,751,358 | |
Vicor Corp. (a) | 19,770 | 1,478,203 | |
52,506,705 | |||
Heavy Electrical Equipment - 1.5% | |||
Vestas Wind Systems A/S | 344,880 | 11,121,241 | |
TOTAL ELECTRICAL EQUIPMENT | 63,627,946 | ||
Energy Equipment & Services - 0.7% | |||
Oil & Gas Equipment & Services - 0.7% | |||
Aspen Aerogels, Inc. (a) | 72,610 | 2,149,256 | |
Baker Hughes Co. Class A | 112,390 | 3,302,018 | |
5,451,274 | |||
Equity Real Estate Investment Trusts (REITs) - 6.6% | |||
Industrial REITs - 5.1% | |||
Prologis (REIT), Inc. | 264,610 | 38,593,369 | |
Specialized REITs - 1.5% | |||
Weyerhaeuser Co. | 286,360 | 11,133,677 | |
TOTAL EQUITY REAL ESTATE INVESTMENT TRUSTS (REITS) | 49,727,046 | ||
Independent Power and Renewable Electricity Producers - 3.1% | |||
Independent Power Producers & Energy Traders - 1.1% | |||
The AES Corp. | 400,470 | 8,501,978 | |
Renewable Electricity - 2.0% | |||
Adani Green Energy Ltd. (a) | 126,470 | 3,087,040 | |
Brookfield Renewable Corp. | 138,230 | 5,165,655 | |
Energy Absolute PCL NVDR | 522,570 | 1,519,796 | |
Scatec Solar AS (b) | 381,900 | 5,503,077 | |
15,275,568 | |||
TOTAL INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS | 23,777,546 | ||
Internet & Direct Marketing Retail - 0.1% | |||
Internet & Direct Marketing Retail - 0.1% | |||
thredUP, Inc. (a)(c) | 57,400 | 487,326 | |
IT Services - 1.0% | |||
IT Consulting & Other Services - 1.0% | |||
IBM Corp. | 61,400 | 7,522,114 | |
Life Sciences Tools & Services - 7.9% | |||
Life Sciences Tools & Services - 7.9% | |||
Agilent Technologies, Inc. | 60,450 | 7,880,262 | |
Codexis, Inc. (a) | 43,400 | 864,962 | |
Danaher Corp. | 186,040 | 51,051,236 | |
59,796,460 | |||
Machinery - 4.0% | |||
Agricultural & Farm Machinery - 1.9% | |||
Deere & Co. | 41,100 | 14,796,822 | |
Construction Machinery & Heavy Trucks - 1.8% | |||
Cummins, Inc. | 65,812 | 13,433,545 | |
Industrial Machinery - 0.3% | |||
Kornit Digital Ltd. (a) | 14,360 | 1,361,759 | |
Zhejiang Sanhua Intelligent Controls Co. Ltd. (A Shares) | 325,680 | 1,037,551 | |
2,399,310 | |||
TOTAL MACHINERY | 30,629,677 | ||
Metals & Mining - 0.6% | |||
Diversified Metals & Mining - 0.6% | |||
Lynas Rare Earths Ltd. (a) | 624,972 | 4,730,632 | |
Oil, Gas & Consumable Fuels - 0.6% | |||
Oil & Gas Exploration & Production - 0.6% | |||
Denbury, Inc. (a) | 57,650 | 4,188,849 | |
Semiconductors & Semiconductor Equipment - 11.0% | |||
Semiconductor Equipment - 4.3% | |||
AEHR Test Systems (a) | 153,500 | 2,087,600 | |
Enphase Energy, Inc. (a) | 66,500 | 11,085,550 | |
SolarEdge Technologies, Inc. (a) | 48,050 | 15,348,131 | |
Xinyi Solar Holdings Ltd. | 2,316,000 | 4,184,721 | |
32,706,002 | |||
Semiconductors - 6.7% | |||
Allegro MicroSystems LLC (a) | 140,990 | 4,042,183 | |
Analog Devices, Inc. | 181,150 | 29,036,534 | |
onsemi (a) | 216,610 | 13,561,952 | |
Power Integrations, Inc. | 46,680 | 4,201,200 | |
50,841,869 | |||
TOTAL SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT | 83,547,871 | ||
Software - 14.0% | |||
Systems Software - 14.0% | |||
Microsoft Corp. | 329,680 | 98,505,083 | |
VMware, Inc. Class A (a) | 62,030 | 7,277,360 | |
105,782,443 | |||
Technology Hardware, Storage & Peripherals - 0.8% | |||
Technology Hardware, Storage & Peripherals - 0.8% | |||
Hewlett Packard Enterprise Co. | 366,610 | 5,836,431 | |
TOTAL COMMON STOCKS | |||
(Cost $712,494,777) | 753,536,884 | ||
Convertible Preferred Stocks - 0.0% | |||
Textiles, Apparel & Luxury Goods - 0.0% | |||
Textiles - 0.0% | |||
CelLink Corp. Series D (d)(e) | |||
(Cost $295,699) | 14,200 | 295,699 | |
Money Market Funds - 0.3% | |||
Fidelity Cash Central Fund 0.07% (f) | 620,451 | 620,575 | |
Fidelity Securities Lending Cash Central Fund 0.07% (f)(g) | 1,296,920 | 1,297,050 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $1,917,625) | 1,917,625 | ||
TOTAL INVESTMENT IN SECURITIES - 100.0% | |||
(Cost $714,708,101) | 755,750,208 | ||
NET OTHER ASSETS (LIABILITIES) - 0.0% | (8,508) | ||
NET ASSETS - 100% | $755,741,700 |
Legend
(a) Non-income producing
(b) 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 $16,749,163 or 2.2% of net assets.
(c) Security or a portion of the security is on loan at period end.
(d) Restricted securities (including private placements) - 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 $295,699 or 0.0% of net assets.
(e) Level 3 security
(f) 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.
(g) Investment made with cash collateral received from securities on loan.
Additional information on each restricted holding is as follows:
Security | Acquisition Date | Acquisition Cost |
CelLink Corp. Series D | 1/20/22 | $295,699 |
Affiliated Central Funds
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $8,161,296 | $310,875,165 | $318,415,886 | $7,282 | $-- | $-- | $620,575 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | -- | 23,429,379 | 22,132,329 | 14,089 | -- | -- | 1,297,050 | 0.0% |
Total | $8,161,296 | $334,304,544 | $340,548,215 | $21,371 | $-- | $-- | $1,917,625 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $753,536,884 | $690,220,604 | $63,316,280 | $-- |
Convertible Preferred Stocks | 295,699 | -- | -- | 295,699 |
Money Market Funds | 1,917,625 | 1,917,625 | -- | -- |
Total Investments in Securities: | $755,750,208 | $692,138,229 | $63,316,280 | $295,699 |
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 | 75.0% |
Ireland | 13.6% |
Denmark | 3.0% |
Netherlands | 1.8% |
Cayman Islands | 1.3% |
Austria | 1.1% |
Norway | 1.0% |
Others (Individually Less Than 1%) | 3.2% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Fidelity® Environment and Alternative Energy Fund
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $1,363,221) — See accompanying schedule: Unaffiliated issuers (cost $712,790,476) | $753,832,583 | |
Fidelity Central Funds (cost $1,917,625) | 1,917,625 | |
Total Investment in Securities (cost $714,708,101) | $755,750,208 | |
Cash | 747,246 | |
Receivable for investments sold | 2,245,474 | |
Receivable for fund shares sold | 947,566 | |
Dividends receivable | 895,919 | |
Distributions receivable from Fidelity Central Funds | 226 | |
Prepaid expenses | 1,026 | |
Other receivables | 6,128 | |
Total assets | 760,593,793 | |
Liabilities | ||
Payable for investments purchased | $1,506,273 | |
Payable for fund shares redeemed | 1,512,707 | |
Accrued management fee | 332,491 | |
Other affiliated payables | 148,688 | |
Other payables and accrued expenses | 54,884 | |
Collateral on securities loaned | 1,297,050 | |
Total liabilities | 4,852,093 | |
Net Assets | $755,741,700 | |
Net Assets consist of: | ||
Paid in capital | $740,874,768 | |
Total accumulated earnings (loss) | 14,866,932 | |
Net Assets | $755,741,700 | |
Net Asset Value, offering price and redemption price per share ($755,741,700 ÷ 24,400,520 shares) | $30.97 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $6,943,176 | |
Income from Fidelity Central Funds (including $14,089 from security lending) | 21,371 | |
Total income | 6,964,547 | |
Expenses | ||
Management fee | $3,281,257 | |
Transfer agent fees | 1,214,646 | |
Accounting fees | 227,367 | |
Custodian fees and expenses | 26,038 | |
Independent trustees' fees and expenses | 2,012 | |
Registration fees | 105,526 | |
Audit | 51,521 | |
Legal | 1,524 | |
Interest | 886 | |
Miscellaneous | 2,010 | |
Total expenses before reductions | 4,912,787 | |
Expense reductions | (14,751) | |
Total expenses after reductions | 4,898,036 | |
Net investment income (loss) | 2,066,511 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 45,060,236 | |
Foreign currency transactions | 147,636 | |
Total net realized gain (loss) | 45,207,872 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers (net of increase in deferred foreign taxes of $9,689) | (30,450,310) | |
Assets and liabilities in foreign currencies | (4,200) | |
Total change in net unrealized appreciation (depreciation) | (30,454,510) | |
Net gain (loss) | 14,753,362 | |
Net increase (decrease) in net assets resulting from operations | $16,819,873 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $2,066,511 | $1,985,372 |
Net realized gain (loss) | 45,207,872 | (3,213,521) |
Change in net unrealized appreciation (depreciation) | (30,454,510) | 68,284,486 |
Net increase (decrease) in net assets resulting from operations | 16,819,873 | 67,056,337 |
Distributions to shareholders | (64,644,758) | (13,727,960) |
Share transactions | ||
Proceeds from sales of shares | 631,087,095 | 204,311,751 |
Reinvestment of distributions | 61,338,201 | 13,015,832 |
Cost of shares redeemed | (262,840,215) | (78,130,888) |
Net increase (decrease) in net assets resulting from share transactions | 429,585,081 | 139,196,695 |
Total increase (decrease) in net assets | 381,760,196 | 192,525,072 |
Net Assets | ||
Beginning of period | 373,981,504 | 181,456,432 |
End of period | $755,741,700 | $373,981,504 |
Other Information | ||
Shares | ||
Sold | 18,010,951 | 7,351,508 |
Issued in reinvestment of distributions | 1,802,725 | 653,424 |
Redeemed | (7,814,961) | (3,226,046) |
Net increase (decrease) | 11,998,715 | 4,778,886 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Fidelity Environment and Alternative Energy Fund
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $30.16 | $23.80 | $24.92 | $26.31 | $23.89 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .11 | .24 | .27 | .24 | .27 |
Net realized and unrealized gain (loss) | 3.46 | 8.02 | (.81) | (.25) | 3.83 |
Total from investment operations | 3.57 | 8.26 | (.54) | (.01) | 4.10 |
Distributions from net investment income | (.10) | (.26) | (.23) | (.22) | (.22) |
Distributions from net realized gain | (2.66) | (1.64) | (.35) | (1.16) | (1.46) |
Total distributions | (2.76) | (1.90) | (.58) | (1.38) | (1.68) |
Redemption fees added to paid in capitalB | – | – | – | – | –D |
Net asset value, end of period | $30.97 | $30.16 | $23.80 | $24.92 | $26.31 |
Total ReturnE | 11.02% | 38.97% | (2.35)% | .39% | 17.73% |
Ratios to Average Net AssetsC,F,G | |||||
Expenses before reductions | .79% | .85% | .85% | .87% | .87% |
Expenses net of fee waivers, if any | .79% | .85% | .85% | .87% | .87% |
Expenses net of all reductions | .79% | .85% | .85% | .87% | .86% |
Net investment income (loss) | .33% | .95% | 1.08% | .96% | 1.07% |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $755,742 | $373,982 | $181,456 | $160,960 | $188,383 |
Portfolio turnover rateH | 89% | 28% | 49% | 62% | 47% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
G Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
H Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the financial statements.
Fidelity® Natural Resources 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, 2022 | Past 1 year | Past 5 years | Past 10 years |
Fidelity® Natural Resources Fund | 49.71% | 4.81% | 1.48% |
$10,000 Over 10 Years
Let's say hypothetically that $10,000 was invested in Fidelity® Natural Resources Fund on February 29, 2012.
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.
![](https://capedge.com/proxy/N-CSR/0001379491-22-001658/img789799336_740.jpg)
Period Ending Values | ||
$11,586 | Fidelity® Natural Resources Fund | |
$39,037 | S&P 500® Index |
Fidelity® Natural Resources Fund
Management's Discussion of Fund Performance
Market Recap: The S&P 500® index gained 16.39% for the 12 months ending February 28, 2022. U.S. large-cap equities retreated to begin the new year after posting a strong result in 2021 amid improved economic growth, strong corporate earnings, widespread COVID-19 vaccination, and accommodative fiscal and monetary stimulus. These tailwinds, among others, have supported the historic rebound for U.S. stocks since the early-2020 outbreak and spread of COVID-19. The uptrend was briefly interrupted in September, with the index returning -4.65% as sentiment turned broadly negative due to a host of factors. These included inflationary pressure from surging commodity prices, rising bond yields, supply constraint and disruption, and the delta variant of the coronavirus. Also, the U.S. Federal Reserve signaled it could soon begin to taper the bond purchases it has made since the onset of the pandemic. The S&P 500® reversed course in October, rising 7.01% on earnings strength, followed by a 4.48% advance in December, after studies suggested that the omicron variant resulted in fewer severe COVID-19 cases. Uncertainty then washed over the market as the calendar turned. Stocks slid as investors digested geopolitical unrest, with Russia invading and escalating its attack on Ukraine, and the Fed’s accelerated plan to hike interest rates amid soaring inflation. The year-to-date pullback for the index was -8.01%. For the full 12 months, energy stocks rose 55%, driven by surging oil prices, whereas communications services (+1%) notably lagged.Comments from Portfolio Manager Ashley Fernandes: For the fiscal year ending February 28, 2022, the fund gained 49.71%, outperforming the 44.75% advance of the S&P North American Natural Resources Sector Index, as well as the broad-based S&P 500® index. Versus the industry index, industry positioning was the primary contributor, especially an overweighting in the oil & gas exploration & production group. An underweighting and security selection in gold and stock selection in integrated oil & gas also lifted the fund's relative result. The fund's top individual relative contributor was an outsized stake in Canadian National Resources, which gained about 112% the past 12 months. The company was among our biggest holdings. The fund's non-index stake in Meg Energy gained approximately 155%. We added to our stake in the company the past 12 months. The fund's non-index stake in Imperial Oil, a position we established this period, gained 106%. In contrast, the primary detractor from performance versus the industry index was stock selection in oil & gas exploration & production. Stock picks and an overweighting in oil & gas refining & marketing and security selection in diversified metals & mining also hampered the fund's relative performance. The fund's largest individual relative detractor was an underweighting in ConocoPhillips, which gained 88% the past year. ConocoPhillips was not held at period end. Our second-largest relative detractor this period was avoiding Devon Energy, an index component that gained 194%. Avoiding EOG Resources, an index component that gained about 89%, also hurt relative performance. Notable changes in positioning include a higher allocation to the copper and oil & gas equipment & services subindustries.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: Following Board approval in April 2021, Select Natural Resources Portfolio was renamed Fidelity Natural Resources Fund, effective May 1, 2021, to better align with Fidelity's other thematic investment fund offerings.Fidelity® Natural Resources Fund
Investment Summary (Unaudited)
Top Ten Stocks as of February 28, 2022
% of fund's net assets | |
Exxon Mobil Corp. | 15.4 |
Canadian Natural Resources Ltd. | 9.4 |
Hess Corp. | 7.8 |
Freeport-McMoRan, Inc. | 7.5 |
Halliburton Co. | 4.2 |
Phillips 66 Co. | 3.8 |
Imperial Oil Ltd. | 3.2 |
Glencore Xstrata PLC | 3.0 |
MEG Energy Corp. | 3.0 |
Tourmaline Oil Corp. | 3.0 |
60.3 |
Top Industries (% of fund's net assets)
As of February 28, 2022 | ||
Oil, Gas & Consumable Fuels | 59.7% | |
Metals & Mining | 19.2% | |
Containers & Packaging | 8.3% | |
Energy Equipment & Services | 8.0% | |
Chemicals | 2.2% | |
All Others* | 2.6% |
* Includes short-term investments and net other assets (liabilities).
Fidelity® Natural Resources Fund
Schedule of Investments February 28, 2022
Showing Percentage of Net Assets
Common Stocks - 99.1% | |||
Shares | Value | ||
Chemicals - 2.2% | |||
Fertilizers & Agricultural Chemicals - 2.2% | |||
CF Industries Holdings, Inc. | 79,300 | $6,438,367 | |
Nutrien Ltd. | 77,800 | 6,691,107 | |
13,129,474 | |||
Construction Materials - 0.7% | |||
Construction Materials - 0.7% | |||
Eagle Materials, Inc. | 16,900 | 2,312,427 | |
Summit Materials, Inc. (a) | 58,600 | 1,829,492 | |
4,141,919 | |||
Containers & Packaging - 8.3% | |||
Metal & Glass Containers - 3.9% | |||
Ball Corp. | 46,800 | 4,199,832 | |
Berry Global Group, Inc. (a) | 38,800 | 2,353,220 | |
Crown Holdings, Inc. | 121,000 | 14,843,070 | |
O-I Glass, Inc. (a) | 119,000 | 1,520,820 | |
22,916,942 | |||
Paper Packaging - 4.4% | |||
Avery Dennison Corp. | 56,800 | 10,008,160 | |
Graphic Packaging Holding Co. | 103,000 | 2,119,740 | |
Packaging Corp. of America | 33,300 | 4,901,427 | |
Sealed Air Corp. | 139,800 | 9,384,774 | |
26,414,101 | |||
TOTAL CONTAINERS & PACKAGING | 49,331,043 | ||
Energy Equipment & Services - 8.0% | |||
Oil & Gas Drilling - 0.4% | |||
Helmerich & Payne, Inc. | 63,200 | 2,289,736 | |
Oil & Gas Equipment & Services - 7.6% | |||
Championx Corp. | 104,300 | 2,233,063 | |
Halliburton Co. | 756,500 | 25,365,445 | |
Liberty Oilfield Services, Inc. Class A (a)(b) | 338,700 | 4,226,976 | |
Oceaneering International, Inc. (a) | 241,528 | 3,535,970 | |
Schlumberger Ltd. | 81,600 | 3,201,984 | |
U.S. Silica Holdings, Inc. (a) | 229,900 | 3,324,354 | |
Weatherford International PLC (a) | 128,535 | 3,650,394 | |
45,538,186 | |||
TOTAL ENERGY EQUIPMENT & SERVICES | 47,827,922 | ||
Metals & Mining - 19.2% | |||
Aluminum - 0.3% | |||
Alcoa Corp. | 19,600 | 1,476,664 | |
Copper - 10.0% | |||
First Quantum Minerals Ltd. | 521,100 | 15,281,489 | |
Freeport-McMoRan, Inc. | 952,100 | 44,701,095 | |
59,982,584 | |||
Diversified Metals & Mining - 3.8% | |||
Glencore Xstrata PLC | 3,038,400 | 17,865,819 | |
Ivanhoe Mines Ltd. (a) | 231,619 | 2,357,306 | |
Nickel Mines Ltd. | 2,290,349 | 2,536,808 | |
22,759,933 | |||
Gold - 5.1% | |||
Equinox Gold Corp. (a)(b) | 508,200 | 3,598,056 | |
Franco-Nevada Corp. | 77,900 | 11,472,043 | |
Newcrest Mining Ltd. sponsored ADR | 225,900 | 4,181,409 | |
Novagold Resources, Inc. (a) | 179,600 | 1,253,608 | |
Royal Gold, Inc. | 49,400 | 5,990,244 | |
Wheaton Precious Metals Corp. (b) | 97,100 | 4,252,009 | |
30,747,369 | |||
TOTAL METALS & MINING | 114,966,550 | ||
Oil, Gas & Consumable Fuels - 59.7% | |||
Integrated Oil & Gas - 19.9% | |||
Cenovus Energy, Inc. | 504,900 | 7,926,930 | |
Exxon Mobil Corp. | 1,171,600 | 91,876,871 | |
Imperial Oil Ltd. | 433,100 | 19,439,100 | |
119,242,901 | |||
Oil & Gas Exploration & Production - 29.4% | |||
Africa Oil Corp. (b) | 2,404,100 | 5,500,505 | |
Antero Resources Corp. (a) | 199,700 | 4,579,121 | |
Canadian Natural Resources Ltd. (b) | 1,010,000 | 56,388,300 | |
Harbour Energy PLC (a)(b) | 913,360 | 4,836,770 | |
Hess Corp. | 463,100 | 46,800,886 | |
Kosmos Energy Ltd. (a)(b) | 1,642,200 | 7,981,092 | |
MEG Energy Corp. (a) | 1,361,356 | 17,775,496 | |
Murphy Oil Corp. | 405,200 | 14,048,284 | |
Tourmaline Oil Corp. | 449,600 | 17,735,700 | |
175,646,154 | |||
Oil & Gas Refining & Marketing - 7.1% | |||
CVR Energy, Inc. | 130,700 | 2,272,873 | |
Phillips 66 Co. | 272,716 | 22,973,596 | |
Valero Energy Corp. | 204,100 | 17,044,391 | |
42,290,860 | |||
Oil & Gas Storage & Transport - 3.3% | |||
Genesis Energy LP | 1,219,148 | 14,568,819 | |
Targa Resources Corp. | 79,800 | 5,216,526 | |
19,785,345 | |||
TOTAL OIL, GAS & CONSUMABLE FUELS | 356,965,260 | ||
Paper & Forest Products - 1.0% | |||
Forest Products - 1.0% | |||
Interfor Corp. | 90,500 | 2,756,769 | |
West Fraser Timber Co. Ltd. | 34,100 | 3,403,812 | |
6,160,581 | |||
TOTAL COMMON STOCKS | |||
(Cost $425,665,398) | 592,522,749 | ||
Money Market Funds - 3.9% | |||
Fidelity Cash Central Fund 0.07% (c) | 5,184,266 | 5,185,303 | |
Fidelity Securities Lending Cash Central Fund 0.07% (c)(d) | 18,437,542 | 18,439,385 | |
TOTAL MONEY MARKET FUNDS | |||
(Cost $23,624,688) | 23,624,688 | ||
TOTAL INVESTMENT IN SECURITIES - 103.0% | |||
(Cost $449,290,086) | 616,147,437 | ||
NET OTHER ASSETS (LIABILITIES) - (3.0)% | (18,113,907) | ||
NET ASSETS - 100% | $598,033,530 |
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
Fiscal year to date information regarding the Fund's investments in Fidelity Central Funds, including the ownership percentage, is presented below.
Fund | Value, beginning of period | Purchases | Sales Proceeds | Dividend Income | Realized Gain/Loss | Change in Unrealized appreciation (depreciation) | Value, end of period | % ownership, end of period |
Fidelity Cash Central Fund 0.07% | $1,866,336 | $132,303,648 | $128,984,681 | $1,638 | $-- | $-- | $5,185,303 | 0.0% |
Fidelity Securities Lending Cash Central Fund 0.07% | 868,201 | 236,780,874 | 219,209,690 | 41,973 | -- | -- | 18,439,385 | 0.0% |
Total | $2,734,537 | $369,084,522 | $348,194,371 | $43,611 | $-- | $-- | $23,624,688 |
Amounts in the income column in the above table include any capital gain distributions from underlying funds, which are presented in the corresponding line-item in the Statement of Operations, if applicable. Amount for Fidelity Securities Lending Cash Central Fund 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.
Investment Valuation
The following is a summary of the inputs used, as of February 28, 2022, 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 | $592,522,749 | $569,820,160 | $22,702,589 | $-- |
Money Market Funds | 23,624,688 | 23,624,688 | -- | -- |
Total Investments in Securities: | $616,147,437 | $593,444,848 | $22,702,589 | $-- |
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 | 28.6% |
Bailiwick of Jersey | 3.0% |
Australia | 1.1% |
Others (Individually Less Than 1%) | 1.3% |
100.0% |
See accompanying notes which are an integral part of the financial statements.
Fidelity® Natural Resources Fund
Financial Statements
Statement of Assets and Liabilities
February 28, 2022 | ||
Assets | ||
Investment in securities, at value (including securities loaned of $18,257,554) — See accompanying schedule: Unaffiliated issuers (cost $425,665,398) | $592,522,749 | |
Fidelity Central Funds (cost $23,624,688) | 23,624,688 | |
Total Investment in Securities (cost $449,290,086) | $616,147,437 | |
Foreign currency held at value (cost $276,113) | 276,594 | |
Receivable for investments sold | 3,853,103 | |
Receivable for fund shares sold | 11,537,112 | |
Dividends receivable | 1,443,716 | |
Distributions receivable from Fidelity Central Funds | 1,708 | |
Prepaid expenses | 3,669 | |
Other receivables | 115,539 | |
Total assets | 633,378,878 | |
Liabilities | ||
Payable to custodian bank | $18,762 | |
Payable for investments purchased | 14,746,725 | |
Payable for fund shares redeemed | 1,680,979 | |
Accrued management fee | 236,138 | |
Other affiliated payables | 90,888 | |
Other payables and accrued expenses | 132,965 | |
Collateral on securities loaned | 18,438,891 | |
Total liabilities | 35,345,348 | |
Net Assets | $598,033,530 | |
Net Assets consist of: | ||
Paid in capital | $716,997,759 | |
Total accumulated earnings (loss) | (118,964,229) | |
Net Assets | $598,033,530 | |
Net Asset Value, offering price and redemption price per share ($598,033,530 ÷ 17,474,771 shares) | $34.22 |
See accompanying notes which are an integral part of the financial statements.
Statement of Operations
Year ended February 28, 2022 | ||
Investment Income | ||
Dividends | $10,283,831 | |
Income from Fidelity Central Funds (including $41,973 from security lending) | 43,611 | |
Total income | 10,327,442 | |
Expenses | ||
Management fee | $2,052,436 | |
Transfer agent fees | 815,910 | |
Accounting fees | 151,801 | |
Custodian fees and expenses | 30,999 | |
Independent trustees' fees and expenses | 1,300 | |
Registration fees | 62,703 | |
Audit | 54,974 | |
Legal | 1,053 | |
Interest | 586 | |
Miscellaneous | 2,611 | |
Total expenses before reductions | 3,174,373 | |
Expense reductions | (8,507) | |
Total expenses after reductions | 3,165,866 | |
Net investment income (loss) | 7,161,576 | |
Realized and Unrealized Gain (Loss) | ||
Net realized gain (loss) on: | ||
Investment securities: | ||
Unaffiliated issuers | 22,878,071 | |
Foreign currency transactions | (4,758) | |
Total net realized gain (loss) | 22,873,313 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investment securities: | ||
Unaffiliated issuers | 124,170,126 | |
Assets and liabilities in foreign currencies | 1,612 | |
Total change in net unrealized appreciation (depreciation) | 124,171,738 | |
Net gain (loss) | 147,045,051 | |
Net increase (decrease) in net assets resulting from operations | $154,206,627 |
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets
Year ended February 28, 2022 | Year ended February 28, 2021 | |
Increase (Decrease) in Net Assets | ||
Operations | ||
Net investment income (loss) | $7,161,576 | $4,107,234 |
Net realized gain (loss) | 22,873,313 | (86,930,924) |
Change in net unrealized appreciation (depreciation) | 124,171,738 | 112,607,802 |
Net increase (decrease) in net assets resulting from operations | 154,206,627 | 29,784,112 |
Distributions to shareholders | (5,734,164) | (4,520,020) |
Share transactions | ||
Proceeds from sales of shares | 383,163,467 | 119,747,809 |
Reinvestment of distributions | 5,352,192 | 4,308,576 |
Cost of shares redeemed | (231,841,612) | (171,966,676) |
Net increase (decrease) in net assets resulting from share transactions | 156,674,047 | (47,910,291) |
Total increase (decrease) in net assets | 305,146,510 | (22,646,199) |
Net Assets | ||
Beginning of period | 292,887,020 | 315,533,219 |
End of period | $598,033,530 | $292,887,020 |
Other Information | ||
Shares | ||
Sold | 13,086,738 | 6,708,913 |
Issued in reinvestment of distributions | 199,634 | 210,950 |
Redeemed | (8,430,799) | (9,621,746) |
Net increase (decrease) | 4,855,573 | (2,701,883) |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights
Fidelity Natural Resources Fund
Years ended February 28, | 2022 | 2021 | 2020 A | 2019 | 2018 |
Selected Per–Share Data | |||||
Net asset value, beginning of period | $23.21 | $20.59 | $25.55 | $27.51 | $29.13 |
Income from Investment Operations | |||||
Net investment income (loss)B,C | .51 | .30 | .30 | .29 | .43D |
Net realized and unrealized gain (loss) | 10.91 | 2.69 | (4.88) | (1.97) | (1.64) |
Total from investment operations | 11.42 | 2.99 | (4.58) | (1.68) | (1.21) |
Distributions from net investment income | (.41) | (.37) | (.30) | (.28) | (.39) |
Distributions from net realized gain | – | – | (.08) | –E | (.02) |
Total distributions | (.41) | (.37) | (.38) | (.28) | (.41) |
Redemption fees added to paid in capitalB | – | – | – | – | –E |
Net asset value, end of period | $34.22 | $23.21 | $20.59 | $25.55 | $27.51 |
Total ReturnF | 49.71% | 14.76% | (18.25)% | (6.06)% | (4.16)% |
Ratios to Average Net AssetsC,G,H | |||||
Expenses before reductions | .82% | .89% | .84% | .81% | .83% |
Expenses net of fee waivers, if any | .81% | .89% | .84% | .81% | .83% |
Expenses net of all reductions | .81% | .88% | .84% | .80% | .82% |
Net investment income (loss) | 1.84% | 1.62% | 1.18% | 1.02% | 1.54%D |
Supplemental Data | |||||
Net assets, end of period (000 omitted) | $598,034 | $292,887 | $315,533 | $424,167 | $910,733 |
Portfolio turnover rateI | 98% | 90% | 8% | 26% | 78% |
A For the year ended February 29.
B Calculated based on average shares outstanding during the period.
C Net investment income (loss) is affected by the timing of the declaration of dividends by any underlying mutual funds or exchange-traded funds (ETFs). Net investment income (loss) of any such underlying funds is not included in the Fund's net investment income (loss) ratio.
D Net investment income per share reflects one or more large, non-recurring dividend(s) which amounted to $.31 per share. Excluding such non-recurring dividend(s), the ratio of net investment income (loss) to average net assets would have been .41%.
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 mutual funds or exchange-traded funds (ETFs) are not included in the Fund's expense ratio. The Fund indirectly bears its proportionate share of these expenses. For additional expense information related to investments in Fidelity Central Funds, please refer to the "Investments in Fidelity Central Funds" note found in the Notes to Financial Statements section of the most recent Annual or Semi-Annual report.
H Expense ratios reflect operating expenses of the class. Expenses before reductions do not reflect amounts reimbursed, waived, or reduced through arrangements with the investment adviser, brokerage services, or other offset arrangements, if applicable, and do not represent the amount paid by the class during periods when reimbursements, waivers or reductions occur.
I Amount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Statements
For the period ended February 28, 2022
1. Organization.
Fidelity Environment and Alternative Energy Fund (formerly Environment and Alternative Energy Portfolio) and Fidelity Natural Resources Fund (formerly Natural Resources Portfolio) (the Funds) are non-diversified funds of Fidelity Select Portfolios (the Trust). 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 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. Fidelity Natural Resources Fund may also invest in certain precious metals.
2. Investments in Fidelity Central Funds.
Funds may 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 Schedule of Investments lists any Fidelity Central Funds held as an investment as of period end, but does not include the underlying holdings of each Fidelity Central Fund. An investing fund indirectly bears its proportionate share of the expenses of the underlying Fidelity Central Funds.
Based on its investment objective, each Fidelity Central Fund may invest or participate in various investment vehicles or strategies that are similar to those of the investing fund. These strategies are consistent with the investment objectives of the investing fund and may involve certain economic risks which may cause a decline in value of each of the Fidelity Central Funds and thus a decline in the value of the investing fund.
Fidelity Central Fund | Investment Manager | Investment Objective | Investment Practices | Expense Ratio(a) |
Fidelity Money Market Central Funds | Fidelity Management & Research Company LLC (FMR) | Each fund seeks to obtain a high level of current income consistent with the preservation of capital and liquidity. | Short-term Investments | Less than .005% |
(a) Expenses expressed as a percentage of average net assets and are as of each underlying Central Fund's most recent annual or semi-annual shareholder report.
A complete unaudited list of holdings for each Fidelity Central Fund is available upon request or at the Securities and Exchange Commission website at www.sec.gov. In addition, the financial statements of the Fidelity Central Funds which contain the significant accounting policies (including investment valuation policies) of those funds, and are not covered by the Report of Independent Registered Public Accounting Firm, are available on the Securities and Exchange Commission website or upon request.
3. Significant Accounting Policies.
Each Fund is an investment company and applies the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946 Financial Services - Investment Companies. 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. Each Fund's Schedule of Investments lists any underlying mutual funds or exchange-traded funds (ETFs) but does not include the underlying holdings of these funds. The following summarizes the significant accounting policies of each 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 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 – Unadjusted 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. 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, 2022 is included at the end of each Fund's Schedule of Investments.
Foreign Currency. Certain 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 for certain Funds include proceeds received from litigation. Commissions paid to certain brokers with whom the investment adviser, or its affiliates, places trades on behalf of a fund include an amount in addition to trade execution, which may be rebated back to a fund. Any such rebates are included in net realized gain (loss) on investments in the Statement of Operations. 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. Funds may file withholding tax reclaims in certain jurisdictions to recover a portion of amounts previously withheld. Any withholding tax reclaims income is included in the Statement of Operations in dividends. Any receivables for withholding tax reclaims are included in the Statement of Assets and Liabilities in dividends receivable.
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. Expenses included in the accompanying financial statements reflect the expenses of that fund and do not include any expenses associated with any underlying mutual funds or exchange-traded funds. Although not included in a fund's expenses, a fund indirectly bears its proportionate share of these expenses through the net asset value of each underlying mutual fund or exchange-traded fund. 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 certain Funds, certain independent Trustees have elected to defer receipt of a portion of their annual compensation. Deferred amounts are invested in affiliated mutual funds, are marked-to-market and remain in a fund until distributed in accordance with the Plan. The investment of deferred amounts and the offsetting payable to the Trustees presented below are included in the accompanying Statement of Assets and Liabilities in other receivables and other payables and accrued expenses, as applicable.
Fidelity Natural Resources Fund | $91,819 |
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, 2022, 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. Fidelity Environment and Alternative Energy 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 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, partnerships, passive foreign investment companies (PFIC), deferred Trustee compensation, capital loss carryforwards and losses deferred due to wash sales and excise tax regulations.
As of period end, the cost and unrealized appreciation (depreciation) in securities, and derivatives if applicable, for federal income tax purposes were as follows for each Fund:
Tax cost | Gross unrealized appreciation | Gross unrealized depreciation | Net unrealized appreciation (depreciation) | |
Fidelity Environment and Alternative Energy Fund | $715,665,206 | $ 83,801,956 | $(43,716,954) | $ 40,085,002 |
Fidelity Natural Resources Fund | 453,743,995 | 166,760,072 | (4,356,630) | 162,403,442 |
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 | |
Fidelity Environment and Alternative Energy Fund | $– | $– | $– | $ 40,084,524 |
Fidelity Natural Resources Fund | 3,860,903 | – | (283,804,804) | 161,065,410 |
Capital loss carryforwards are only available to offset future capital gains of the Funds to the extent provided by regulations and may be limited. 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 capital loss carryfoward | |
Fidelity Natural Resources Fund | $(81,832,559) | $(201,972,245) | $(283,804,804) |
Certain of the Funds intend to elect to defer to the next fiscal year capital losses recognized during the period November 1, 2021 to February 28, 2022. Loss deferrals were as follows:
Capital losses | |
Fidelity Environment and Alternative Energy Fund | $(25,207,903) |
The tax character of distributions paid was as follows:
February 28, 2022 | |||
Ordinary Income | Long-term Capital Gains | Total | |
Fidelity Environment and Alternative Energy Fund | $6,756,801 | $57,887,957 | $64,644,758 |
Fidelity Natural Resources Fund | 5,734,164 | – | 5,734,164 |
February 28, 2021 | |||
Ordinary Income | Long-term Capital Gains | Total | |
Fidelity Environment and Alternative Energy Fund | $5,071,517 | $8,656,443 | $13,727,960 |
Fidelity Natural Resources Fund | 4,520,020 | – | 4,520,020 |
Restricted Securities (including Private Placements). Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities generally may be resold in transactions exempt from registration or to the public if the securities are registered. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at an acceptable price may be difficult. Information regarding restricted securities held at period end is included at the end of the Schedule of Investments, if applicable.
4. Purchases and Sales of Investments.
Purchases and sales of securities, other than short-term securities, and in-kind transactions, as applicable, are noted in the table below.
Purchases ($) | Sales ($) | |
Fidelity Environment and Alternative Energy Fund | 921,685,796 | 547,788,079 |
Fidelity Natural Resources Fund | 536,497,191 | 381,485,583 |
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company 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 monthly average net assets of a group of registered investment companies with which the investment adviser has management contracts. 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 | |
Fidelity Environment and Alternative Energy Fund | .30% | .22% | .53% |
Fidelity Natural Resources Fund | .30% | .22% | .53% |
Transfer Agent Fees. Fidelity Investments Institutional Operations Company LLC (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:
Fidelity Environment and Alternative Energy Fund | .20% |
Fidelity Natural Resources Fund | .21% |
Accounting 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. For the period, the fees were equivalent to the following annual rates:
% of Average Net Assets | |
Fidelity Environment and Alternative Energy Fund | .04 |
Fidelity Natural Resources Fund | .04 |
Brokerage Commissions. A portion of portfolio transactions were placed 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 | |
Fidelity Environment and Alternative Energy Fund | $7,724 |
Fidelity Natural Resources Fund | 15,121 |
Interfund Lending Program. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the SEC), each Fund, along with other registered investment companies having management contracts with Fidelity Management & Research Company LLC (FMR), or other affiliated entities of FMR, may participate in an interfund lending program. This program provides an alternative credit facility allowing each Fund to borrow from, or lend money to, other participating affiliated funds. At period end, there were no interfund loans outstanding. 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 | |
Fidelity Environment and Alternative Energy Fund | Borrower | $9,133,818 | .32% | $886 |
Fidelity Natural Resources Fund | Borrower | $8,374,000 | .32% | $586 |
Interfund Trades. Funds may purchase from or sell securities to other Fidelity Funds under procedures adopted by the Board. The procedures have been designed to ensure these interfund trades are executed in accordance with Rule 17a-7 of the 1940 Act. Any interfund trades are included within the respective purchases and sales amounts shown in the Purchases and Sales of Investments note. Interfund trades during the period are noted in the table below.
Purchases ($) | Sales ($) | Realized Gain (Loss) ($) | |
Fidelity Environment and Alternative Energy Fund | 57,083,020 | 16,696,069 | 3,017,716 |
Fidelity Natural Resources Fund | 21,831,270 | 27,030,428 | 3,396,868 |
Other. During the period, the investment adviser reimbursed the Funds for certain losses as follows:
Amount ($) | |
Fidelity Natural Resources Fund | 3,214 |
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 listed below. During the period, there were no borrowings on this line of credit.
Amount | |
Fidelity Environment and Alternative Energy Fund | $897 |
Fidelity Natural Resources Fund | 598 |
7. Security Lending.
Funds lend portfolio securities from time to time in order to earn additional income. Lending agents are used, including National Financial Services (NFS), an affiliate of the investment adviser. Pursuant to a securities lending agreement, NFS will receive a fee, which is capped at 9.9% of a fund's daily lending revenue, for its services as lending agent. A fund may lend securities to certain qualified borrowers, including NFS. On the settlement date of the loan, a 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 a fund and any additional required collateral is delivered to a fund on the next business day. A 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, a fund may apply collateral received from the borrower against the obligation. A 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. Any loaned securities are identified as such in the Schedule of Investments, and the value of loaned securities and cash collateral at period end, as applicable, are presented in the 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. Affiliated security lending activity, if any, was as follows:
Total Security Lending Fees Paid to NFS | Security Lending Income From Securities Loaned to NFS | Value of Securities Loaned to NFS at Period End | |
Fidelity Environment and Alternative Energy Fund | $1,471 | $30 | $– |
Fidelity Natural Resources Fund | $4,273 | $– | $– |
8. Expense Reductions.
During the period the investment adviser or an affiliate reimbursed and/or waived a portion of operating expenses as follows:
Amount | |
Fidelity Environment and Alternative Energy Fund | $14,751 |
Fidelity Natural Resources Fund | 8,507 |
9. Other.
A 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, a fund may also enter into contracts that provide general indemnifications. A fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against a fund. The risk of material loss from such claims is considered remote.
10. Coronavirus (COVID-19) Pandemic.
An outbreak of COVID-19 first detected in China during December 2019 has since spread globally and was declared a pandemic by the World Health Organization during March 2020. Developments that disrupt global economies and financial markets, such as the COVID-19 pandemic, may magnify factors that affect the Funds' performance.
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Fidelity Select Portfolios and Shareholders of Fidelity Environment and Alternative Energy Fund and Fidelity Natural Resources Fund
Opinions on the Financial Statements
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Fidelity Environment and Alternative Energy Fund and Fidelity Natural Resources Fund (two of the funds constituting Fidelity Select Portfolios, referred to hereafter as the “Funds”) as of February 28, 2022, the related statements of operations for the year ended February 28, 2022, the statements of changes in net assets for each of the two years in the period ended February 28, 2022, including the related notes, and the financial highlights for each of the five years in the period ended February 28, 2022 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of February 28, 2022, 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 ended February 28, 2022 and the financial highlights for each of the five years in the period ended February 28, 2022 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinions
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of February 28, 2022 by correspondence with the custodians, issuers of privately offered securities 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 opinions.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
April 14, 2022
We have served as the auditor of one or more investment companies in the Fidelity group of funds since 1932.
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 317 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. Robert A. Lawrence is an interested person and currently serves as Acting 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. David M. Thomas serves as Lead Independent Trustee 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 high income and certain equity funds, and other Boards oversee Fidelity's investment-grade bond, money market, asset allocation, and other equity funds. The asset allocation funds may invest in Fidelity® funds overseen by the funds' Board. 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 FMR 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 FMR, 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, Audit, and Compliance Committees. Appropriate personnel, including but not limited to the funds' Chief Compliance Officer (CCO), FMR's internal auditor, the independent accountants, the funds' Treasurer and portfolio management personnel, make periodic reports to the Board's committees, as appropriate, including an annual review of Fidelity's risk management program for the Fidelity® funds. 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+
Bettina Doulton (1964)
Year of Election or Appointment: 2020
Trustee
Ms. Doulton also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Doulton served in a variety of positions at Fidelity Investments, including as a managing director of research (2006-2007), portfolio manager to certain Fidelity® funds (1993-2005), equity analyst and portfolio assistant (1990-1993), and research assistant (1987-1990). Ms. Doulton currently owns and operates Phi Builders + Architects and Cellardoor Winery. Previously, Ms. Doulton served as a member of the Board of Brown Capital Management, LLC (2014-2018).
Robert A. Lawrence (1952)
Year of Election or Appointment: 2020
Trustee
Acting Chairman of the Board of Trustees
Mr. Lawrence also serves as Trustee of other funds. Previously, Mr. Lawrence served as a Member of the Advisory Board of certain funds. Prior to his retirement in 2008, Mr. Lawrence served as Vice President of certain Fidelity® funds (2006-2008), Senior Vice President, Head of High Income Division of Fidelity Management & Research Company (investment adviser firm, 2006-2008), and President of Fidelity Strategic Investments (investment adviser firm, 2002-2005).
* 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 FMR.
+ 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+
Thomas P. Bostick (1956)
Year of Election or Appointment: 2021
Trustee
Lieutenant General Bostick also serves as Trustee of other Fidelity® funds. Prior to his retirement, General Bostick (United States Army, Retired) held a variety of positions within the U.S. Army, including Commanding General and Chief of Engineers, U.S. Army Corps of Engineers (2012-2016) and Deputy Chief of Staff and Director of Human Resources, U.S. Army (2009-2012). General Bostick currently serves as a member of the Board and Finance and Governance Committees of CSX Corporation (transportation, 2020-present) and a member of the Board and Corporate Governance and Nominating Committee of Perma-Fix Environmental Services, Inc. (nuclear waste management, 2020-present). General Bostick serves as Chief Executive Officer of Bostick Global Strategies, LLC (consulting, 2016-present) and as a member of the Board of HireVue, Inc. (video interview and assessment, 2020-present). Previously, General Bostick served as a Member of the Advisory Board of certain Fidelity® funds (2021), President, Intrexon Bioengineering (2018-2020) and Chief Operating Officer (2017-2020) and Senior Vice President of the Environment Sector (2016-2017) of Intrexon Corporation (biopharmaceutical company).
Dennis J. Dirks (1948)
Year of Election or Appointment: 2018
Trustee
Mr. Dirks also serves as Trustee of other Fidelity® funds. Prior to his retirement in May 2003, Mr. Dirks served as Chief Operating Officer and as a member of the Board of The Depository Trust & Clearing Corporation (financial markets infrastructure), President, Chief Operating Officer and a member of the Board of The Depository Trust Company (DTC), President and a member of the Board of the National Securities Clearing Corporation (NSCC), Chief Executive Officer and a member of the Board of the Government Securities Clearing Corporation and Chief Executive Officer and a member of the Board of the Mortgage-Backed Securities Clearing Corporation. Mr. Dirks currently serves as a member of the Finance Committee (2016-present) and Board (2017-present) and is Treasurer (2018-present) of the Asolo Repertory Theatre.
Donald F. Donahue (1950)
Year of Election or Appointment: 2018
Trustee
Mr. Donahue also serves as Trustee of other Fidelity® funds. Mr. Donahue serves as President and Chief Executive Officer of Miranda Partners, LLC (risk consulting for the financial services industry, 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 currently serves as a member (2007-present) and Co-Chairman (2016-present) of the Board of United Way of New York and a member of the Board of The Leadership Academy (previously NYC Leadership Academy) (2012-present). Mr. Donahue previously served as a member of the Advisory Board of certain Fidelity® funds (2015-2018).
Vicki L. Fuller (1957)
Year of Election or Appointment: 2020
Trustee
Ms. Fuller also serves as Trustee of other Fidelity® funds. Previously, Ms. Fuller served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chief Investment Officer of the New York State Common Retirement Fund (2012-2018) and held a variety of positions at AllianceBernstein L.P. (global asset management, 1985-2012), including Managing Director (2006-2012) and Senior Vice President and Senior Portfolio Manager (2001-2006). Ms. Fuller currently serves as a member of the Board, Audit Committee and Nominating and Governance Committee of two Blackstone business development companies (2020-present), as a member of the Board of Treliant, LLC (consulting, 2019-present), as a member of the Advisory Board of Ariel Alternatives, LLC (private equity, 2021-present) and as a member of the Board and Chair of the Audit Committee of Gusto, Inc. (software, 2021-present). In addition, Ms. Fuller currently serves as a member of the Board of Roosevelt University (2019-present) and as a member of the Executive Board of New York University’s Stern School of Business. Ms. Fuller previously served as a member of the Board, Audit Committee and Nominating and Governance Committee of The Williams Companies, Inc. (natural gas infrastructure, 2018-2021).
Patricia L. Kampling (1959)
Year of Election or Appointment: 2020
Trustee
Ms. Kampling also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Kampling served as Chairman of the Board and Chief Executive Officer (2012-2019), President and Chief Operating Officer (2011-2012) and Executive Vice President and Chief Financial Officer (2010-2011) of Alliant Energy Corporation. Ms. Kampling currently serves as a member of the Board, Finance Committee and Governance, Compensation and Nominating Committee of Xcel Energy Inc. (utilities company, 2020-present) and as a member of the Board, Audit, Finance and Risk Committee and Safety, Environmental, Technology and Operations Committee and Chair of the Executive Development and Compensation Committee of American Water Works Company, Inc. (utilities company, 2019-present). In addition, Ms. Kampling currently serves as a member of the Board of the Nature Conservancy, Wisconsin Chapter (2019-present). Previously, Ms. Kampling served as a Member of the Advisory Board of certain Fidelity® funds (2020), a member of the Board, Compensation Committee and Executive Committee and Chair of the Audit Committee of Briggs & Stratton Corporation (manufacturing, 2011-2021), a member of the Board of Interstate Power and Light Company (2012-2019) and Wisconsin Power and Light Company (2012-2019) (each a subsidiary of Alliant Energy Corporation) and as a member of the Board and Workforce Development Committee of the Business Roundtable (2018-2019).
Thomas A. Kennedy (1955)
Year of Election or Appointment: 2021
Trustee
Mr. Kennedy also serves as Trustee of other Fidelity® funds. Previously, Mr. Kennedy served as a Member of the Advisory Board of certain Fidelity® funds (2020) and held a variety of positions at Raytheon Company (aerospace and defense, 1983-2020), including Chairman and Chief Executive Officer (2014-2020) and Executive Vice President and Chief Operating Officer (2013-2014). Mr. Kennedy currently serves as Executive Chairman of the Board of Directors of Raytheon Technologies Corporation (aerospace and defense, 2020-present). He is also a member of the Rutgers School of Engineering Industry Advisory Board (2011-present) and a member of the UCLA Engineering Dean’s Executive Board (2016-present).
Oscar Munoz (1959)
Year of Election or Appointment: 2021
Trustee
Mr. Munoz also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Munoz served as Executive Chairman (2020-2021), Chief Executive Officer (2015-2020), President (2015-2016) and a member of the Board (2010-2021) of United Airlines Holdings, Inc. Mr. Munoz currently serves as a member of the Board of CBRE Group, Inc. (commercial real estate, 2020-present), a member of the Board of Univision Communications, Inc. (Hispanic media, 2020-present) and a member of the Advisory Board of Salesforce.com, Inc. (cloud-based software, 2020-present). Previously, Mr. Munoz served as a Member of the Advisory Board of certain Fidelity® funds (2021).
Garnett A. Smith (1947)
Year of Election or Appointment: 2013
Trustee
Mr. Smith also serves as Trustee of other Fidelity® funds. Prior to his retirement, Mr. Smith served as Chairman and Chief Executive Officer (1990-1997) and President (1986-1990) of Inbrand Corp. (manufacturer of personal absorbent products). Prior to his employment with Inbrand Corp., he was employed by a retail fabric chain and North Carolina National Bank (now Bank of America). Mr. Smith previously served as a member of the Advisory Board of certain Fidelity® funds (2012-2013).
David M. Thomas (1949)
Year of Election or Appointment: 2018
Trustee
Lead Independent Trustee
Mr. Thomas also serves as Trustee of other Fidelity® funds. Previously, Mr. Thomas served as Executive Chairman (2005-2006) and Chairman and Chief Executive Officer (2000-2005) of IMS Health, Inc. (pharmaceutical and healthcare information solutions). Mr. Thomas currently serves as a member of the Board of Fortune Brands Home and Security (home and security products, 2004-present) and as Director (2013-present) and Non-Executive Chairman of the Board (2022-present) of Interpublic Group of Companies, Inc. (marketing communication).
Susan Tomasky (1953)
Year of Election or Appointment: 2020
Trustee
Ms. Tomasky also serves as Trustee of other Fidelity® funds. Prior to her retirement, Ms. Tomasky served in various executive officer positions at American Electric Power Company, Inc. (1998-2011), including most recently as President of AEP Transmission (2007-2011). Ms. Tomasky currently serves as a member of the Board and Sustainability Committee and as Chair of the Audit Committee of Marathon Petroleum Corporation (2018-present) and as a member of the Board, Executive Committee, Corporate Governance Committee and Organization and Compensation Committee and as Chair of the Audit Committee of Public Service Enterprise Group, Inc. (utilities company, 2012-present) and as a member of the Board of its subsidiary company, Public Service Electric and Gas Co. (2021-present). In addition, Ms. Tomasky currently serves as a member (2009-present) and President (2020-present) of the Board of the Royal Shakespeare Company – America (2009-present), as a member of the Board of the Columbus Association for the Performing Arts (2011-present) and as a member of the Board and Kenyon in the World Committee of Kenyon College (2016-present). Previously, Ms. Tomasky served as a Member of the Advisory Board of certain Fidelity® funds (2020), as a member of the Board of the Columbus Regional Airport Authority (2007-2020), as a member of the Board (2011-2018) and Lead Independent Director (2015-2018) of Andeavor Corporation (previously Tesoro Corporation) (independent oil refiner and marketer) and as a member of the Board of Summit Midstream Partners LP (energy, 2012-2018).
Michael E. Wiley (1950)
Year of Election or Appointment: 2008
Trustee
Mr. Wiley also serves as Trustee of other Fidelity® funds. Previously, Mr. Wiley served as a member of the Advisory Board of certain Fidelity® funds (2018-2020), Chairman, President and CEO of Baker Hughes, Inc. (oilfield services, 2000-2004). Mr. Wiley also previously served as a member of the Board of Andeavor Corporation (independent oil refiner and marketer, 2005-2018), a member of the Board of Andeavor Logistics LP (natural resources logistics, 2015-2018) and a member of the Board of High Point Resources (exploration and production, 2005-2020).
+ 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 (if any) may be sent to Fidelity Investments, P.O. Box 55235, Boston, Massachusetts 02205-5235. Correspondence intended for an officer or Peter S. Lynch may be sent to Fidelity Investments, 245 Summer Street, Boston, Massachusetts 02210. Officers appear below in alphabetical order.
Name, Year of Birth; Principal Occupation
Peter S. Lynch (1944)
Year of Election or Appointment: 2018
Member of the Advisory Board
Mr. Lynch also serves as a Member of the Advisory Board of other Fidelity® funds. Mr. Lynch is Vice Chairman and a Director of Fidelity Management & Research Company LLC (investment adviser firm). In addition, Mr. Lynch serves as a Trustee of Boston College and as the Chairman of the Inner-City Scholarship Fund. Previously, Mr. Lynch served as Vice Chairman and a Director of FMR Co., Inc. (investment adviser firm) and on the Special Olympics International Board of Directors (1997-2006).
Craig S. Brown (1977)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Brown also serves as an officer of other funds. Mr. Brown serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2013-present).
John J. Burke III (1964)
Year of Election or Appointment: 2018
Chief Financial Officer
Mr. Burke also serves as Chief Financial Officer of other funds. Mr. Burke serves as Head of Investment Operations for Fidelity Fund and Investment Operations (2018-present) and is an employee of Fidelity Investments (1998-present). Previously Mr. Burke served as head of Asset Management Investment Operations (2012-2018).
William C. Coffey (1969)
Year of Election or Appointment: 2019
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 Secretary and CLO of certain funds (2018-2019); CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company and FMR Co., Inc. (investment adviser firms, 2018-2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2018-2019); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2018-2019); and Assistant Secretary of certain funds (2009-2018).
Timothy M. Cohen (1969)
Year of Election or Appointment: 2018
Vice President
Mr. Cohen also serves as Vice President of other funds. Mr. Cohen serves as Co-Head of Equity (2018-present), a Director of Fidelity Management & Research (Japan) Limited (investment adviser firm, 2016-present), and is an employee of Fidelity Investments. Previously, Mr. Cohen served as Executive Vice President of Fidelity SelectCo, LLC (2019), Head of Global Equity Research (2016-2018), Chief Investment Officer - Equity and a Director of Fidelity Management & Research (U.K.) Inc. (investment adviser firm, 2013-2015) and as a Director of Fidelity Management & Research (Hong Kong) Limited (investment adviser firm, 2017).
Jonathan Davis (1968)
Year of Election or Appointment: 2010
Assistant Treasurer
Mr. Davis also serves as an officer of other funds. Mr. Davis serves as Assistant Treasurer of FIMM, LLC (2021-present), FMR Capital, Inc. (2017-present), FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); 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).
Laura M. Del Prato (1964)
Year of Election or Appointment: 2018
Assistant Treasurer
Ms. Del Prato also serves as an officer of other funds. Ms. Del Prato serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2017-present). Previously, Ms. Del Prato served as President and Treasurer of The North Carolina Capital Management Trust: Cash Portfolio and Term Portfolio (2018-2020). Prior to joining Fidelity Investments, Ms. Del Prato served as a Managing Director and Treasurer of the JPMorgan Mutual Funds (2014-2017). Prior to JPMorgan, Ms. Del Prato served as a partner at Cohen Fund Audit Services (accounting firm, 2012-2013) and KPMG LLP (accounting firm, 2004-2012).
Colm A. Hogan (1973)
Year of Election or Appointment: 2020
Assistant Treasurer
Mr. Hogan also serves as an officer of other funds. Mr. Hogan serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present) and is an employee of Fidelity Investments (2005-present). Previously, Mr. Hogan served as Deputy Treasurer of certain Fidelity® funds (2016-2020) and Assistant Treasurer of certain Fidelity® funds (2016-2018).
Pamela R. Holding (1964)
Year of Election or Appointment: 2018
Vice President
Ms. Holding also serves as Vice President of other funds. Ms. Holding serves as Co-Head of Equity (2018-present) and is an employee of Fidelity Investments (2013-present). Previously, Ms. Holding served as Executive Vice President of Fidelity SelectCo, LLC (2019) and as Chief Investment Officer of Fidelity Institutional Asset Management (2013-2018).
Cynthia Lo Bessette (1969)
Year of Election or Appointment: 2019
Secretary and Chief Legal Officer (CLO)
Ms. Lo Bessette also serves as an officer of other funds. Ms. Lo Bessette serves as CLO, Secretary, and Senior Vice President of Fidelity Management & Research Company LLC (investment adviser firm, 2019-present); CLO of Fidelity Management & Research (Hong Kong) Limited, FMR Investment Management (UK) Limited, and Fidelity Management & Research (Japan) Limited (investment adviser firms, 2019-present); Secretary of FD Funds GP LLC (2021-present), FD Funds Holding LLC (2021-present), and FD Funds Management LLC (2021-present); and Assistant Secretary of FIMM, LLC (2019-present). She is a Senior Vice President and Deputy General Counsel of FMR LLC (diversified financial services company, 2019-present), and is an employee of Fidelity Investments. Previously, Ms. Lo Bessette served as CLO, Secretary, and Senior Vice President of FMR Co., Inc. (investment adviser firm, 2019); Secretary of Fidelity SelectCo, LLC and Fidelity Investments Money Management, Inc. (investment adviser firms, 2019). Prior to joining Fidelity Investments, Ms. Lo Bessette was Executive Vice President, General Counsel (2016-2019) and Senior Vice President, Deputy General Counsel (2015-2016) of OppenheimerFunds (investment management company) and Deputy Chief Legal Officer (2013-2015) of Jennison Associates LLC (investment adviser firm).
Chris Maher (1972)
Year of Election or Appointment: 2020
Deputy Treasurer
Mr. Maher also serves as an officer of other funds. Mr. Maher serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), and is an employee of Fidelity Investments (2008-present). Previously, Mr. Maher served as Assistant Treasurer of certain funds (2013-2020); 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).
Jason P. Pogorelec (1975)
Year of Election or Appointment: 2020
Chief Compliance Officer
Mr. Pogorelec also serves as Chief Compliance Officer of other funds. Mr. Pogorelec is a senior Vice President of Asset Management Compliance for Fidelity Investments and is an employee of Fidelity Investments (2006-present). Previously, Mr. Pogorelec served as Vice President, Associate General Counsel for Fidelity Investments (2010-2020) and Assistant Secretary of certain Fidelity funds (2015-2020).
Brett Segaloff (1972)
Year of Election or Appointment: 2021
Anti-Money Laundering (AML) Officer
Mr. Segaloff also serves as an AML Officer of other funds and other related entities. He is Director, Anti-Money Laundering (2007-present) of FMR LLC (diversified financial services company) and is an employee of Fidelity Investments (1996-present).
Stacie M. Smith (1974)
Year of Election or Appointment: 2018
President and Treasurer
Ms. Smith also serves as an officer of other funds. Ms. Smith serves as Assistant Treasurer of FIMM, LLC (2021-present) and FMR Capital, Inc. (2017-present), 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 Assistant Treasurer (2013-2019) and Deputy Treasurer (2013-2016) of certain Fidelity® funds.
Jim Wegmann (1979)
Year of Election or Appointment: 2019
Assistant Treasurer
Mr. Wegmann also serves as an officer of other funds. Mr. Wegmann serves as Assistant Treasurer of FIMM, LLC (2021-present) and is an employee of Fidelity Investments (2011-present). Previously, Mr. Wegmann served as Assistant Treasurer of certain Fidelity® funds (2019-2021).
Shareholder Expense Example
As a shareholder, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or redemption proceeds, as applicable and (2) ongoing costs, which generally include 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 a 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, 2021 to February 28, 2022).
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 for a class/Fund under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If any fund is a shareholder of any underlying mutual funds or exchange-traded funds (ETFs) (the Underlying Funds), such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses incurred presented in the table. These fees and expenses are not included in the 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 actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the 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. If any fund is a shareholder of any Underlying Funds, such fund indirectly bears its proportional share of the expenses of the Underlying Funds in addition to the direct expenses as presented in the table. These fees and expenses are not included in the 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, 2021 | Ending Account Value February 28, 2022 | Expenses Paid During Period-B September 1, 2021 to February 28, 2022 | |
Fidelity Environment and Alternative Energy Fund | .77% | |||
Actual | $1,000.00 | $929.10 | $3.68 | |
Hypothetical-C | $1,000.00 | $1,020.98 | $3.86 | |
Fidelity Natural Resources Fund | .79% | |||
Actual | $1,000.00 | $1,359.40 | $4.62 | |
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 annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/ 365 (to reflect the one-half year period). The fees and expenses of any Underlying Funds are not included in each annualized expense ratio.
C 5% return per year before expenses
Distributions (Unaudited)
The funds hereby designate as capital gain dividend the amounts noted below for the taxable year ended February 28, 2022, or, if subsequently determined to be different, the net capital gain of such year.
Fidelity Environment and Alternative Energy Fund | $57,868,528 |
A percentage of the dividends distributed during the fiscal year for the following funds qualify for the dividends–received deduction for corporate shareholders:
April 2021 | December 2021 | |
Fidelity Environment and Alternative Energy Fund | 97% | 56% |
Fidelity Natural Resources Fund | – | 84% |
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 2021 | December 2021 | |
Fidelity Environment and Alternative Energy Fund | 99% | 75% |
Fidelity Natural Resources Fund | – | 100% |
A percentage of the dividends distributed during the fiscal year for the following funds qualify as a section 199A dividend:
April 2021 | December 2021 | |
Fidelity Environment and Alternative Energy Fund | 1% | 4% |
The funds hereby designate the percentages noted below of the short-term capital gain dividends distributed during the fiscal year as qualifying to be taxed as short-term capital gain dividends for nonresident alien shareholders:
December, 2021 | |
Fidelity Environment and Alternative Energy Portfolio | 100% |
The funds will notify shareholders in January 2023 of amounts for use in preparing 2022 income tax returns.
Liquidity Risk Management Program
The Securities and Exchange Commission adopted Rule 22e-4 under the Investment Company Act of 1940 (the Liquidity Rule) to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders.
The Funds have adopted and implemented a liquidity risk management program pursuant to the Liquidity Rule (the Program) effective December 1, 2018. The Program is reasonably designed to assess and manage each Fund’s liquidity risk and to comply with the requirements of the Liquidity Rule. Each Fund’s Board of Trustees (the Board) has designated each Fund’s investment adviser as administrator of the Program. The Fidelity advisers have established a Liquidity Risk Management Committee (the LRM Committee) to manage the Program for each of the Fidelity Funds. The LRM Committee monitors the adequacy and effectiveness of implementation of the Program and on a periodic basis assesses each Fund’s liquidity risk based on a variety of factors including (1) the Fund’s investment strategy, (2) portfolio liquidity and cash flow projections during normal and reasonably foreseeable stressed conditions, (3) shareholder redemptions, (4) borrowings and other funding sources and (5) in the case of exchange-traded funds, certain additional factors including the effect of the Fund’s prices and spreads, market participants, and basket compositions on the overall liquidity of the Fund’s portfolio, as applicable.
In accordance with the Program, each of the Fund’s portfolio investments is classified into one of four liquidity categories described below based on a determination of a reasonable expectation for how long it would take to convert the investment to cash (or sell or dispose of the investment) without significantly changing its market value.
- Highly liquid investments – cash or convertible to cash within three business days or less
- Moderately liquid investments – convertible to cash in three to seven calendar days
- Less liquid investments – can be sold or disposed of, but not settled, within seven calendar days
- Illiquid investments – cannot be sold or disposed of within seven calendar days
Liquidity classification determinations take into account a variety of factors including various market, trading and investment-specific considerations, as well as market depth, and generally utilize analysis from a third-party liquidity metrics service.
The Liquidity Rule places a 15% limit on a fund’s illiquid investments and requires funds that do not primarily hold assets that are highly liquid investments to determine and maintain a minimum percentage of the fund’s net assets to be invested in highly liquid investments (highly liquid investment minimum or HLIM). The Program includes provisions reasonably designed to comply with the 15% limit on illiquid investments and for determining, periodically reviewing and complying with the HLIM requirement as applicable.
At a recent meeting of the Fund’s Board of Trustees, the LRM Committee provided a written report to the Board pertaining to the operation, adequacy, and effectiveness of implementation of the Program for the annual period from December 1, 2020 through November 30, 2021. The report concluded that the Program has been implemented and is operating effectively and is reasonably designed to assess and manage the Fund’s liquidity risk.
EAE-NRF-ANN-0422
1.9901475.100
Item 2.
Code of Ethics
As of the end of the period, February 28, 2022, 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 Donald F. Donahue is an audit committee financial expert, as defined in Item 3 of Form N-CSR. Mr. Donahue 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 Automotive Portfolio, Banking Portfolio, Biotechnology Portfolio, Brokerage and Investment Management Portfolio, Chemicals Portfolio, Communication Services Portfolio, Construction and Housing Portfolio, Consumer Discretionary Portfolio, Consumer Staples Portfolio, Defense and Aerospace Portfolio, Energy Portfolio, Fidelity Environment and Alternative Energy Fund, Fidelity Natural Resources Fund, Financial Services Portfolio, FinTech Portfolio, Gold Portfolio, Health Care Portfolio, Health Care Services Portfolio, Industrials Portfolio, Insurance Portfolio, IT Services Portfolio, Leisure Portfolio, Materials Portfolio, Medical Technology and Devices Portfolio, Pharmaceuticals Portfolio, Retailing Portfolio, Semiconductors Portfolio, Software and IT Services Portfolio, Tech Hardware Portfolio, Technology Portfolio, Telecommunications Portfolio, Transportation Portfolio, Utilities Portfolio and Wireless Portfolio (the “Funds”):
Services Billed by PwC
February 28, 2022 FeesA
Audit Fees | Audit-Related Fees | Tax Fees | All Other Fees | |
Automotive Portfolio | $27,700 | $2,700 | $6,500 | $900 |
Banking Portfolio | $27,800 | $2,700 | $6,500 | $900 |
Biotechnology Portfolio | $78,600 | $5,400 | $18,700 | $1,800 |
Brokerage and Investment Management Portfolio | $28,100 | $2,800 | $7,300 | $900 |
Chemicals Portfolio | $27,500 | $2,700 | $6,500 | $900 |
Communication Services Portfolio | $33,200 | $3,200 | $6,500 | $1,000 |
Construction and Housing Portfolio | $27,300 | $2,700 | $6,500 | $900 |
Consumer Discretionary Portfolio | $27,500 | $2,700 | $6,500 | $900 |
Consumer Staples Portfolio | $33,500 | $3,200 | $7,400 | $1,000 |
Defense and Aerospace Portfolio | $28,100 | $2,800 | $7,200 | $900 |
Energy Portfolio | $34,600 | $2,800 | $7,600 | $900 |
Fidelity Environment and Alternative Energy Fund | $27,500 | $2,700 | $7,400 | $900 |
Fidelity Natural Resources Fund | $27,100 | $2,700 | $7,300 | $900 |
Financial Services Portfolio | $28,500 | $2,800 | $7,300 | $900 |
FinTech Portfolio | $28,100 | $2,800 | $6,500 | $900 |
Gold Portfolio | $47,900 | $4,900 | $13,400 | $1,600 |
Health Care Portfolio | $39,700 | $3,700 | $7,400 | $1,200 |
Health Care Services Portfolio | $27,700 | $2,700 | $6,500 | $900 |
Industrials Portfolio | $27,500 | $2,700 | $7,400 | $900 |
Insurance Portfolio | $28,100 | $2,800 | $6,500 | $900 |
IT Services Portfolio | $28,200 | $2,800 | $6,500 | $900 |
Leisure Portfolio | $28,100 | $2,800 | $7,400 | $900 |
Materials Portfolio | $33,500 | $3,200 | $6,500 | $1,000 |
Medical Technology and Devices Portfolio | $27,700 | $2,700 | $7,400 | $900 |
Pharmaceuticals Portfolio | $27,500 | $2,700 | $7,200 | $900 |
Retailing Portfolio | $28,100 | $2,800 | $6,500 | $900 |
Semiconductors Portfolio | $28,200 | $2,800 | $6,500 | $900 |
Software and IT Services Portfolio | $27,300 | $2,700 | $7,400 | $900 |
Tech Hardware Portfolio | $34,500 | $2,800 | $6,500 | $900 |
Technology Portfolio | $31,900 | $3,100 | $7,400 | $1,000 |
Telecommunications Portfolio | $33,000 | $3,100 | $6,500 | $1,000 |
Transportation Portfolio | $33,700 | $2,700 | $6,500 | $900 |
Utilities Portfolio | $28,100 | $2,800 | $7,300 | $900 |
Wireless Portfolio | $27,100 | $2,700 | $6,500 | $900 |
February 28, 2021 FeesA
Automotive Portfolio | $27,300 | $2,600 | $7,200 | $1,000 |
Banking Portfolio | $27,400 | $2,600 | $6,300 | $1,000 |
Biotechnology Portfolio | $58,300 | $5,100 | $46,600 | $2,000 |
Brokerage and Investment Management Portfolio | $27,600 | $2,600 | $6,500 | $1,000 |
Chemicals Portfolio | $27,100 | $2,600 | $7,200 | $1,000 |
Communication Services Portfolio | $32,700 | $3,100 | $6,300 | $1,200 |
Construction and Housing Portfolio | $26,900 | $2,600 | $6,300 | $1,000 |
Consumer Discretionary Portfolio | $29,600 | $2,600 | $7,200 | $1,000 |
Consumer Staples Portfolio | $32,900 | $3,100 | $6,300 | $1,200 |
Defense and Aerospace Portfolio | $27,600 | $2,600 | $7,000 | $1,000 |
Energy Portfolio | $30,600 | $2,700 | $8,000 | $1,100 |
Fidelity Environment and Alternative Energy Fund | $27,100 | $2,600 | $6,300 | $1,000 |
Fidelity Natural Resources Fund | $26,600 | $2,600 | $6,500 | $1,000 |
Financial Services Portfolio | $30,600 | $2,700 | $6,500 | $1,100 |
FinTech Portfolio | $27,600 | $2,600 | $6,300 | $1,000 |
Gold Portfolio | $46,900 | $4,800 | $13,000 | $1,900 |
Health Care Portfolio | $41,400 | $3,500 | $7,200 | $1,400 |
Health Care Services Portfolio | $27,300 | $2,600 | $7,000 | $1,000 |
Industrials Portfolio | $29,600 | $2,600 | $6,300 | $1,000 |
Insurance Portfolio | $27,600 | $2,600 | $6,300 | $1,000 |
IT Services Portfolio | $27,800 | $2,700 | $6,300 | $1,000 |
Leisure Portfolio | $27,600 | $2,600 | $6,300 | $1,000 |
Materials Portfolio | $32,900 | $3,100 | $6,500 | $1,200 |
Medical Technology and Devices Portfolio | $27,300 | $2,600 | $7,200 | $1,000 |
Pharmaceuticals Portfolio | $27,100 | $2,600 | $6,300 | $1,000 |
Retailing Portfolio | $27,600 | $2,600 | $8,600 | $1,000 |
Semiconductors Portfolio | $27,800 | $2,700 | $7,000 | $1,000 |
Software and IT Services Portfolio | $26,900 | $2,600 | $7,200 | $1,000 |
Tech Hardware Portfolio | $28,100 | $2,700 | $7,700 | $1,100 |
Technology Portfolio | $33,800 | $2,900 | $7,200 | $1,200 |
Telecommunications Portfolio | $32,400 | $3,000 | $6,300 | $1,200 |
Transportation Portfolio | $27,300 | $2,600 | $7,000 | $1,000 |
Utilities Portfolio | $30,100 | $2,700 | $6,500 | $1,000 |
Wireless Portfolio | $26,600 | $2,600 | $6,300 | $1,000 |
A Amounts may reflect rounding.
The following table(s) present(s) 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 Fund(s) and that are rendered on behalf of Fidelity Management & Research Company LLC ("FMR") and entities controlling, controlled by, or under common control with FMR (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 Fund(s) (“Fund Service Providers”):
Services Billed by PwC
February 28, 2022A | February 28, 2021A | |
Audit-Related Fees | $8,239,800 | $9,436,200 |
Tax Fees | $354,200 | $14,300 |
All Other Fees | $- | $- |
A Amounts may reflect rounding.
“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 Fund(s), FMR (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 Fund(s) are as follows:
Billed By | February 28, 2022A | February 28, 2021A |
PwC | $14,235,200 | $15,011,600 |
A Amounts may reflect rounding.
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(their) audit of the Fund(s), taking into account representations from PwC, in accordance with Public Company Accounting
Oversight Board rules, regarding its independence from the Fund(s) and its(their) related entities and FMR’s review of the appropriateness and permissibility under applicable law of such non-audit services prior to their provision to the Fund(s) 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 periodically.
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 Fund’s(s’) last two fiscal years relating to services provided to (i) the Fund(s) or (ii) any Fund Service Provider that relate directly to the operations and financial reporting of the Fund(s).
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 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.
Disclosure of Securities Lending Activities for Closed-End Management
Investment Companies
Not applicable.
Item 13.
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) | |
(a) | (3) | Not applicable. |
(b) |
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/Stacie M. Smith |
Stacie M. Smith | |
President and Treasurer | |
Date: | April 21, 2022 |
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/Stacie M. Smith |
Stacie M. Smith | |
President and Treasurer | |
Date: | April 21, 2022 |
By: | /s/John J. Burke III |
John J. Burke III | |
Chief Financial Officer | |
Date: | April 21, 2022 |