Quarterly Sector UpdatePRIMARY CONTRIBUTOR

Denise Chisholm Sector StrategistFidelity Management & Research CompanyQuantitative Research & Investments

Not FDIC Insured May Lose Value No Bank Guarantee

Third Quarter 2021Commentary

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Performance Summary: Defensives Lag CyclicalsCyclical sectors generally continued to lead in the second quarter as the economic recovery gained momentum. Real estate and energy posted the first- and third-best performance, respectively, while technology surged after a weak Q1. Consumer staples, industrials, and utilities trailed the market by the largest margin, though only utilities posted a negative return for the quarter.

Sector

Performance as of 6/30/21 Weight in S&P 500®Latest Quarter 1-Year 3-Year Annualized Dividend Yield

Communication Services* 10.7% 48.4% 23.3% 0.8% 11.1%

Consumer Discretionary 7.0% 37.1% 19.4% 0.5% 12.3%

Consumer Staples 3.8% 23.3% 14.1% 2.7% 5.9%

Energy 11.3% 49.4% -6.1% 4.0% 2.9%

Financials 8.4% 61.8% 14.0% 1.6% 11.3%

Health Care 8.4% 27.9% 17.0% 1.5% 13.0%

Industrials 4.5% 51.5% 15.0% 1.3% 8.5%

Information Technology 11.6% 42.4% 30.3% 0.8% 27.4%

Materials 5.0% 48.5% 14.9% 1.7% 2.6%

Real Estate 13.1% 31.9% 14.7% 2.3% 2.6%

Utilities -0.4% 15.8% 10.5% 3.2% 2.5%

S&P 500® 8.6% 40.8% 18.7% 1.3%

Past performance is no guarantee of future results. Sectors defined by the Global Industry Classification Standard (GICS®); see Index Definitions for details. Performance metrics reflect S&P 500 sector indexes. * Changes were made to the GICS framework on Sep. 24, 2018; historical S&P 500 communication services sector data prior to Sep. 24, 2018, reflect the legacy telecommunication services sector. The top three performing sectors over each period are shaded green, the bottom three are shaded red. It is not possible to invest directly in an index. All indexes are unmanaged. Percentages may not total 100% due to rounding. Source: Haver Analytics, FactSet, Fidelity Investments, as of 6/30/21.

Sector

Strategist View Longer Time Horizon View Shorter

CommentsOverweight NeutralUnderweight Fundamentals Valuations Relative Strength

Communication Services* ■ Defensive characteristics may hinder performance

Consumer Discretionary ■ + – Solid fundamentals may offset elevated valuations

Consumer Staples ■ + – Defensive characteristics may hinder performance

Energy ■ – + + Poor fundamentals may be priced in

Financials ■ + + + Recovering fundamentals bolster the outlook

Health Care ■ – Solid combination of fundamentals and valuation

Industrials ■ – Other predictive valuation indicators still compelling

Information Technology ■ + Strong fundamentals and solid valuation are appealing

Materials ■ Fundamental indicators and valuation not constructive

Real Estate ■ – – + Elevated valuation likely to be a headwind

Utilities ■ – – Defensive characteristics may hinder performance

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Scorecard: Financials and Energy On TopFinancials screened well across all scorecard metrics, while cheap valuations may help the energy sector offset weaker fundamentals. Conversely, solid fundamentals among consumer discretionary stocks may help counterbalance the sector’s high valuations, leading to a constructive outlook. Conditions appear less favorable for real estate, where high valuations may hamper performance, and utilities, which is less likely than other sectors to benefit from the ongoing economic recovery.

Past performance is no guarantee of future results. Strategist view, fundamentals, valuations, and relative strength are based on the top 3,000 U.S. stocks by market capitalization. Sectors defined by the GICS; see Index Definitions for details. * Historical communication services data has been restated back to 1962 to account for changes to the GICS framework made on Sep. 24, 2018. Strategist view is as of the date indicated based on the information available at that time, and may change based on market or other conditions. This is not necessarily the opinion of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information. Overweight and underweight views represent opportunistic tilts in a hypothetical portfolio relative to broad market sector weights. Sector weights may vary depending on an individual’s risk tolerance and goals. Time horizon view factors are based on historical analysis and are not a qualitative assessment by any individual investment professional. The top three sectors based on each time horizon view metric are shaded green, the bottom three are shaded red. See Glossary and Methodology for details. It is not possible to invest directly in an index. All indexes are unmanaged. Source: Haver Analytics, FactSet, Fidelity Investments, as of 6/30/21.

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Fundamentals: Strength in Tech, Financials, and DiscretionaryThe technology sector again led the fundamentals rankings, topping the market in return on equity and free-cash-flow margin. Financials and consumer discretionary also scored relatively well on fundamental metrics. Real estate was the worst performer byfundamental measures, ranking last on EPS growth and second to last on return on equity, followed by energy and utilities.

Return on Equity (Last 12 Months) Free-Cash-Flow Margin (Last 12 Months)

EBITDA Growth (Last 12 Months)EPS Growth (Last 12 Months)

Fundamentals: Strong and improving fundamentals historically have been an intermediate-term indicator of sector performance. Our analysis gives a view of how each sector has done in terms of growth and profitability.

Past performance is no guarantee of future results. EPS = earnings per share. EBITDA = earnings before interest, taxes, depreciation, and amortization. Financials and real estate EPS growth values over the last 12 months were 58.9% and -45.1%, respectively. Energy EBITDA growth was -55.7%. The financials and real estate sectors are not represented in the EBITDA growth or free-cash-flow margin charts because of differences in their business models and accounting standards. See Glossary and Methodology for further explanation. Sectors based on the top 3,000 U.S. stocks by market capitalization and defined by GICS. Communication services data restated back to 1962. Source: Haver Analytics, Fidelity Investments, as of 6/30/21.

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Valuations: Financials, Energy, and Staples Remain CheapFinancials had the cheapest relative valuations for the fourth quarter in a row. The sector ranked second-best based on price-to-book (P/B) and price-to-earnings (P/E) ratios, which continued to be at the very low end of their historical ranges. Energy and consumer staples stocks also looked relatively inexpensive. The most expensive sectors were consumer discretionary, real estate,and industrials.

Price-to-Book Ratio; Forward Price/Book Ratio Relative to Top 3000 Stocks Price-to-Sales Ratio; Forward Price/Sales Ratio Relative to Top 3000 Stocks

Free-Cash-Flow Yield; Free-Cash-Flow Yield Relative to Top 3000 StocksPrice-to-Earnings Ratio; Forward Price/Earnings Ratio Relative to Top 3000 Stocks

Valuations: On their own, valuations are only a moderately effective indicator of future sector performance, but when combined with other factors, they can be a useful tool in determining the risk-and-reward profile.

Past performance is no guarantee of future results. Free-cash-flow yield reflects free cash flow divided by market price per share; it is the inverse of the price-to-free-cash-flow ratio. Historical range excludes the top and bottom 5%. Green or red circles indicate if current levels are cheap or expensive relative to the historical average, which excludes the top and bottom 5%. The financials and real estate sectors are not represented in the free-cash-flow yield or price-to-sales charts because of differences in their business models and accounting standards. See the Glossary and Methodology for further explanation. Historical range since Jan. 1962. Sectors based on the top 3,000 U.S. stocks by market capitalization and defined by GICS. Communication services data restated back to 1962. Source: Haver Analytics, Fidelity Investments, as of 6/30/21.

Current: Green/Red = Cheap/Expensive Relative to Historical AverageHistorical Range

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Price Relative to the Russell 3000 IndexPrice Relative to the Russell 3000 Index

Past performance is no guarantee of future results. Relative strength compares the performance of each sector with the performance of the broad market, based on changes in the ratio of the securities’ respective prices over time. See Glossary and Methodology for further explanation. Charts represent performance of sectors based on the top 3,000 stocks by market capitalization relative to the Russell 3000 Index. It is not possible to invest directly in an index. All indexes are unmanaged. Source: FactSet, Fidelity Investments, as of 6/30/21.

Sectors Exhibiting Relative WeaknessSectors Exhibiting Relative Strength

Relative Strength: Stocks and sectors that have outperformed the broader market have tended to continue to do so. Thus, relative strength can be an indicator of future returns.

6-Month Review

Relative Strength: Energy, Financials, and Real Estate LeadThe energy, financials, and real estate sectors exhibited the greatest relative strength over the past six months, the result of a rotation into cyclical stocks that began last fall. Conversely, the continued rotation away from defensive stocks put consumer staples in last place in relative strength, followed by health care and utilities.

6-Month Review

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Difference in Historical Odds of Outperformance Between Cyclicals and Defensives, 1962–Present

Nominal Wages, 2003–Present ($Trillions)

Past performance is no guarantee of future results. Cyclical sectors: communication services, consumer discretionary, energy, financials, industrials, materials, real estate, and technology. Defensive sectors: consumer staples, health care, utilities. Source: Haver Analytics, FactSet, Fidelity Investments, as of 5/31/21.

Wage Growth Has Increased Cyclicals’ Odds of OutperformanceWages Are Growing Faster Than during the Recovery from the Great Recession

Wages Have AcceleratedWages have risen unusually fast compared with past recoveries. Wage growth was especially weak following the Great Recession: It accelerated during only 20% of the periods since then, versus roughly half the time since 1962. Strong wage growth historically has boosted cyclical sectors relative to defensives, and the effect since 2009 has been particularly strong.

Great Recession Recovery

COVIDRecovery

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For Bond Yields’ Direction, Check Inflation Expectations The Core Consumer Price Index (CPI) rose 3.8% for the 12 months through May. Do yields follow? There’s been surprisingly little connection between the two, even at higher (top-quartile) inflation levels. Inflation expectations have had a stronger connection to yields. When expectations exceed 2.3%, and are in the top quartile as they are now, yields have tended to increase—even if the pace of expected inflation slows.

… But Inflation Expectations HaveInflation Hasn’t Correlated to Yields, Historically …Historical Odds of Yields Rising (Next 3 Months) as Inflation Accelerates and Decelerates, 2003–Present

Historical Odds of Yields Rising (Next 3 Months) as Inflation Expectations Accelerate and Decelerate, 2003–Present

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Inflation expectations: 5-Year Treasury yield minus the 5-Year Treasury inflation protected securities (TIPS) yield. Source: Haver Analytics, FactSet, Fidelity Investments, as of 5/31/21.

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Earnings Surprises Could Continue S&P 500 companies have blown past analysts’ earnings forecasts, with record numbers of firms beating expectations by more than 20%. Positive earnings surprises historically have legs: After reaching the top quartile of their historical range (as they did in Q1 2020), earnings beats have tended to stay above average for the following two and a half years. Therefore, if history is a guide, positive earnings surprises could persist into next year.

If History Is a Guide, Positive Earnings Surprises May ContinuePositive Earnings Surprises Are at All-Time HighsPercentage of S&P 500 Stocks with Positive Quarterly Earnings Surprises Greater than 20%

Historical Odds of Earnings Surprises Continuing from Top and Bottom Quartiles, 1992–Present

Past performance is no guarantee of future results.Q: quarter. Right chart horizontal axis denotes the number of quarters after earnings surprises fell within either the top or bottom historical quartile. Analysis based on S&P 500 returns. Source: Haver Analytics, FactSet, Fidelity Investments, as of 5/31/21.

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Heed the Bond Market?A high spread between the valuations of the stock market’s most- and least-expensive quartiles suggests that equity investors are nervous. Yet high-yield credit spreads are low, indicating that credit investors aren’t worried. Historically, this setup has spelled opportunity: When equity spreads exceed credit spreads, stocks have advanced 90% of the time over the next 12 months.

Historically, That Backdrop Has Led to Market Gains Equity Investors Appear More Nervous Than Credit Investors Equity and Credit Spreads, 1990–Present Historical Odds of Market Advance (NTM), 1990–Present

Past performance is no guarantee of future results. NTM: Next 12 months. Analysis based on S&P 500 returns. Equity valuation spread: Most expensive quartile minus least expensive quartile based on NTM earnings yield. Credit spread: Bloomberg Barclays U.S. Corporate High Yield Index yield to worst minus the 10-Year Treasury yield. Source: Haver Analytics, FactSet, Fidelity Investments, as of 5/31/21.

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More Worry, Lower Tail Risk, HistoricallyFears of Tail Risk Appear HighCBOE SKEW Index Historical Odds of Advancing Market (NTM) and Maximum 12-Month Loss by

SKEW Level Scenario, 1990–Present

Tail Risk Fears May Be a Good Sign for EquitiesSkew, a statistic derived from the options market, measures investors’ perception of tail risk, or the risk of extreme marketevents. It’s very high currently, in the top decile of its historical range—and that may be a good sign for the stock market. Like many sentiment indicators, skew has often been useful as a contrarian signal, historically: In the past, the more concerned investors have been about tail risk, the shallower drawdowns have been.

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Past performance is no guarantee of future results. CBOE: Chicago Board Options Exchange. NTM: next 12 months. Analysis based on S&P 500 returns. Source: Haver Analytics, FactSet, Fidelity Investments, as of 5/31/21.

Odds of Market Advance 69% 83% 85% 84% 100%

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Frugality May Have Made Energy Stocks ResilientEnergy companies slashed their spending in recent years, helping them maintain positive free cash flow even as oil prices tanked last year. That marks the first time in four decades the sector generated free cash flow through a trough in oil demand. Now a combination of disciplined spending and rising oil prices could bode well for the sector.

Past performance is no guarantee of future results.Source: Haver Analytics, FactSet, Fidelity Investments, as of 5/31/21.

… And Its Free Cash Flow Is High Energy’s Capital Spending Is Low …Energy Sector Capital Spending-to-Sales Ratio Energy Sector Free Cash Flow ($Billions)

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… While Staples Has NotAmid Strong Wage Growth, Discretionary Has Outperformed …Consumer Discretionary Historical Odds of Outperformance, 1962–Present Consumer Staples Historical Odds of Outperformance, 1962–Present

Fast-Rising Wages Have Helped Discretionary, Not StaplesOver the long term, wage growth hasn’t made much of a difference to the performance of the consumer sectors. That changed when wage growth became scarce following the Great Recession. During periods of strong wage growth since then, consumer discretionary usually has tended to beat the market while consumer staples usually has not.

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1962–Present 2009–Present 1962–Present 2009–PresentWages Accelerating Wage Growth In Top Quartile Wages Accelerating Wage Growth In Top Quartile

Past performance is no guarantee of future results.Source: Haver Analytics, FactSet, Fidelity Investments, as of 5/31/21.

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Wage Growth Has Boosted Consumption and Discretionary’s MarginsConsumer discretionary stocks have had two main advantages over consumer staples during periods of strong wage growth. High wage growth often drives greater consumption of discretionary items, and companies in the discretionary sector have been more successful at raising prices to boost margins during these periods.

For Discretionary, Rising Wages Have Meant Higher Margins Historical Odds of Consumption Acceleration (NTM) by Wage Growth Scenario, 1962–Present

Historical Odds of Margin Expansion (NTM) by Wage Growth Scenario, 1962–Present

Source: Haver Analytics, FactSet, Fidelity Investments, as of 5/31/21.

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Wages Accelerating Wage Growth In Top Quartile Wages Accelerating Wage Growth In Top Quartile

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Cheap Gold Mining Stocks Tend to Advance Despite Falling Gold Prices

Gold Mining Stocks Are Cheap on Free Cash Flow

Relative Free-Cash-Flow Yield, 1970–Present Gold Miners’ Historical Odds of Outperformance (NTM) By Relative Valuation and Gold Price Scenario, 1970–Present

Past performance is no guarantee of future results. Source: Haver Analytics, FactSet, Fidelity Investments, as of 5/31/21.

Gold Mining Stocks May Offer Gleaming Value Gold mining stocks are in the cheapest 5% of their historical range on free cash flow (FCF). From such low valuations historically, the stocks have depended less on the price of gold than investors might think. Gold miners have outperformed 76% of the time after their FCF yield was in the top 5% relative to the market, including 71% of the time when the price of gold was falling.

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Rel. FCF Yield in Cheapest 5%Rel. FCF Yield in Cheapest 5% and Gold Prices DecliningFull Period

Matt ReedPortfolio Manager, Research Analyst

FIDSX | Fidelity Select Financial Services Portfolio

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact your investment professional or visit fidelity.com for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

Stock markets, especially foreign markets, are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Industrials industries can be significantly affected by general economic trends, changes in consumer sentiment and spending, commodity prices, legislation, government regulation and spending, import controls, and worldwide competition, and can be subject to liability for environmental damage, depletion of resources, and mandated expenditures for safety and pollution control. Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks. The fund may have additional volatility because of its narrow concentration in a specific industry. Non-diversified funds that focus on a relatively small number of stocks tend to be more volatile than diversified funds and the market as a whole.

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Investment Philosophy

Business value is derived from the ability to generate capital or cash flows over time

Buying underappreciated or improving businesses at lower valuations while focusing on capital and cash flow generation improves the odds of outperformance

A disconnect often exists between price and value because the market misinterprets cyclical trends for secular or underestimates the durability and/or magnitude of future growth and/or returns

Fundamental research can uncover divergences between market expectations and underlying value

Investment Process: Overview

• Global universe of stocks that fall within GICS* Financial Sector

• Custom screening process

• Consistent and above average returns on capital

• Valuations or returns below historical trends

• Appropriate track record of growth relative to industry

• Balance sheet that may be under-utilized

• Strong history of capital allocation decisions

• Meet with management teams

• Seek out unique and discernable competitive advantage

• Identify and confirm clear path to sustainable growth

• Find other catalysts for upward revaluation (expanding returns, new markets, share gains, product cycles, cost/productivity improvements)

• Overlay valuation factors to quantify magnitude of potential mispricing—look for relative value

• Seek to generate alpha through stockpicking over subindustry bets

• Relatively balanced distribution to avoid behavioral pitfalls and tail risk

• Position size is more a function of probability of success than magnitude of upside potential

• Monitor market prices relative to discrete upside and downside targets

* Global Industry Classification Standards. The GICS methodology, developed by MSCI and Standard & Poor’s, is a widely accepted schema for classifying stocks into sectors and industries. The GICS methodology was used in the construction of the fund’s benchmark.

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Stock Universe

Screening for Ideas

Research and Analysis

Portfolio Construction

Financials—Current Conditions and IndicatorsCURRENT U.S. YIELD CURVE U.S. FINANCIAL CONDITIONS

VIX VOLATILITY INDEX XLF VS. 10YR YIELDS

Sources: FactSet.

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Source: Bloomberg. Source: Bloomberg as of 6/30/21.The XLF: the Financial Select Sector SPDR Fund (a Financials sector ETF).

Source: Bloomberg as of 7/13/2021.

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Household Debt Service Ratio (LHS, SA, %) AveragePersonal Saving Rate (RHS, SA, %) Historical Average

Entering and Exiting the Downturn in Better Condition

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TCE RATIO, TANGIBLE EQUITY/ASSET RATIO, & CET1 RATIO

LOAN GROWTH RATES BY TYPE, 1Q84–1Q21

LOAN TO DEPOSIT RATIO

HOUSEHOLD DEBT SERVICE RATIO VS. PERSONAL SAVING RATE

TCE: tangible common equity ratio; CET1: Common Equity Tier 1.Sources: Barclays Research, FDIC, and Federal Reserve Bank of New York, Research and Statistics Group.

Sources: Barclays Research and FDIC.RE = Real Estate. • C&I = Commercial and Industrial.

Source: Federal Reserve, as of 3/31/2021.LHS = Lefthand side. • RHS = Righthand side. • SA = Seasonally Adjusted.

Source: Barclays Research.

Digital Transformation Accelerated with the Pandemic

0

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0100002000030000400005000060000700008000090000

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2018

U.S. Total Number of Commercial Banks and BranchesCommercial Branches Commercial Banks

INDUSTRY CONSOLIDATION CONTINUES AND RETAIL BRANCH COUNT CONTINUES ITS DECLINE

BANKS ARE PARTICIPATING IN THE DIGITAL TRANSFORMATION WITH NEW AND IMPROVING PRODUCTS AND SERVICES

Source: BAC company filings. Source: BAC company filings.

21

Source: FDIC.

DEPOSIT TRANSACTION BY CHANNEL DIGITAL % OF TOTAL SALES

Source: Barclays Research, company filings.

DIGITAL USERS VS DEPOSIT MARKET SHARE

0.0

1.0

2.0

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4.0

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7.0

8.0

1/06 1/07 1/08 1/09 1/10 1/11 1/12 1/13 1/14 1/15 1/16 1/17 1/18 1/19 1/20 1/21

BKX Index Dividend Yield KRX Index Dividend Yield BKX AverageKRX Average US 10YR Yield

0.5x

0.6x

0.7x

0.8x

0.9x

1.0x

1.1x

1.2x

12/95 9/97 6/99 3/01 12/02 9/04 6/06 3/08 12/09 9/11 6/13 3/15 12/16 9/18 6/20

Source: FactSet.

70

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7/14 1/15 7/15 1/16 7/16 1/17 7/17 1/18 7/18 1/19 7/19 1/20 7/20 1/21

Source: FactSet.

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Financials—Performance and Valuation IndicatorsABSOLUTE PERFORMANCE AS OF JUNE 30, 2021 RELATIVE PERFORMANCE AS OF JUNE 30, 2021

RELATIVE VALUE—VALUATIONS BELOW HISTORICAL AVERAGE BKX & KRX INDEX HISTORICAL DIVIDEND YIELD VS 10YR YIELDS

Source: Bloomberg, as of 6/30/2021. Source: Bloomberg, as of 6/30/21.* BKX = KBW Nasdaq Bank Index • KRX = KBW Nasdaq Regional Banking Index.

Dividends: Given strong balance sheets, most banks were able to maintain dividends, with opportunity for further capital return going forward

S&P Financials Absolute Performance (Indexed)

S&P 500 Financials Relative Forward P/E

S&P Financials Relative Performance (Indexed)

Questions and Answers

Glossary and Methodology

24

GlossaryCycle Hit Rate: Calculates the frequency of a sector outperforming the broader equity market over each business cycle phase since 1962. Dividend Yield: Annual dividends per share divided by share price.Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA): A non-GAAP measure often used to compare profitability between companies and industries, because it eliminates the effects of financing and accounting decisions.Earnings-per-Share Growth: Measures the growth in reported earnings per share over the specified past time period.Earnings Yield: Earnings per share divided by share price. It is the inverse of the price-to-earnings (P/E) ratio.Enterprise Value: A measure of a company’s total value that includes its market capitalization as well as short- and long-term debt and cash on its balance sheet.Free Cash Flow (FCF): The amount of cash a company has remaining after expenses, debt service, capital expenditures, and dividends. High free cash flow typically suggests stronger company value.Free-Cash-Flow Margin: The amount of free cash flow as a percentage of revenue. High FCF margin often denotes strong profitability.Free-Cash-Flow Yield: Free cash flow per share divided by share price. A high FCF yield often represents a good investment opportunity, because investors would be paying a reasonable price for healthy cash earnings.Full-Phase Average Performance: Calculates the (geometric) average performance of a sector in a particular phase of the business cycle and subtracts the performance of the broader equity market. Median Monthly Difference: Calculates the difference in the monthly performance of a sector compared with the broader market, and then takes the midpoint of those observations. Price-to-Book (P/B) Ratio: The ratio of a company’s share price to reported accumulated profits and capital.

Price-to-Earnings (P/E) Ratio: The ratio of a company's current share price to its reported earnings. A forward P/E ratio typically uses an average of analysts’ published earnings estimates for the next 12 months.Price-to-Sales (P/S) Ratio: The ratio of a company’s current share price to reported sales.Relative Strength: The comparison of a security’s performance relative to a benchmark, typically a market index. Return on Equity (ROE): The amount, expressed as a percentage, earned on a company’s common stock investment for a given period.Risk Decomposition: A mathematical analysis that estimates the relative contribution of various sources of volatility.

MethodologyStrategist View: Our sector strategist, Denise Chisholm, tracks key indicators that have influenced the historical likelihood of outperformance of each sector. This historical probability analysis informs the Strategist Views.Fundamentals: Sector rankings are based on equally weighting the following four fundamental factors: EBITDA growth, earnings growth, ROE, and FCF margin. However, we evaluate the financials and real estate sectors only on earnings growth and ROE because of differences in their business models and accounting standards.Relative Strength: Compares the strength of a sector versus the S&P 500 index over a six-month period, with a one-month reversal on the latest month; identifying relative strength patterns can be a useful indicator of short-term sector performance.Relative Valuations: Valuation metrics for each sector are relative to the S&P 500. Ratios compute the current relative valuation divided by the 10-year historical average relative valuation, eliminating the top 5% and bottom 5% values to reduce the effect of potential outliers. Sectors are then ranked by their weighted average ratios, weighted as follows: P/E: 37%; P/B: 21%; P/S: 21%; and FCF yield: 21%. However, the financials and real estate sectors are weighted as follows: P/E: 65% and P/B: 35%.

Information provided in this document is for informational and educational purposes only. To the extent any investment information in this material is deemed to be a recommendation, it is not meant to be impartial investment advice or advice in a fiduciary capacity and is not intended to be used as a primary basis for you or your client’s investment decisions. Fidelity and its representatives may have a conflict of interest in the products or services mentioned in this material because they have a financial interest in them, and receive compensation, directly or indirectly, in connection with the management, distribution, and/or servicing of these products or services, including Fidelity funds, certain third-party funds and products, and certain investment services.

Information presented herein is for discussion and illustrative purposes only and is not a recommendation or an offer or solicitation to buy or sell any securities. Views expressed are as of the date indicated, based on the information available at that time, and may change based on market and other conditions. Unless otherwise noted, the opinions provided are those of the authors and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.

References to specific investment themes are for illustrative purposes only and should not be construed as recommendations or investment advice. Investment decisions should be based on an individual’s own goals, time horizon, and tolerance for risk.

This piece may contain assumptions that are “forward-looking statements,” which are based on certain assumptions of future events. Actual events are difficult to predict and may differ from those assumed. There can be no assurance that forward-looking statements will materialize or that actual returns or results will not be materially different from those described here.

Past performance is no guarantee of future results.

Investing involves risk, including risk of loss.

All indexes are unmanaged. You cannot invest directly in an index. Index or benchmark performance presented in this document does not reflect the deduction of advisory fees, transaction charges, and other expenses, which would reduce performance.

Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments.

Because of its narrow focus, sector investing tends to be more volatile than investments that diversify across many sectors and companies. Sector investing is also subject to the additional risks associated with its particular industry.

Index Definitions: The Chicago Board Options Exchange (CBOE) SKEW Index is a measure of the perceived tail risk of the distribution of S&P 500 investment returns over a 30-day horizon. The index values are calculated and published by the CBOE based on current S&P 500 options market data.

The Consumer Price Index (CPI) is a monthly inflationary indicator that measures the change in the cost of a fixed basket of products and services; the unadjusted number is often called “headline CPI.” “Core CPI” excludes food and energy prices.

A Purchasing Managers’ Index (PMI) is a survey of purchasing managers in a certain economic sector. A PMI over 50 represents expansion of the sector compared to the previous month, while a reading under 50 represents a contraction, and a reading of 50 indicates no change. The Institute for Supply Management® reports the U.S. manufacturing PMI®.

The Russell 3000® Index is a market capitalization-weighted index designed to measure the performance of the 3,000 largest companies in the U.S. equity market.

The S&P 500® index is a market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance. S&P 500 is a registered service mark of Standard & Poor’s Financial Services LLC. Sectors and industries are defined by the Global Industry Classification Standard (GICS).

The S&P 500 sector indexes include the standard GICS sectors that make up the S&P 500index. The market capitalization of all S&P 500 sector indexes together comprises the market capitalization of the parent S&P 500 index; each member of the S&P 500 index is assigned to one (and only one) sector.

VIX (Volatility Index) is a financial benchmark designed to be an up-to-the-minute market estimate of the expected volatility of the S&P 500 Index.

BKX Index is the KBW (Keefe, Bruyette & Woods) Nasdaq Bank Index.

KRX Index = KBW (Keefe, Bruyette & Woods)Nasdaq Regional Bank Index.

Appendix

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Appendix

26

Sectors are defined as follows: Communication Services: companies that facilitate communication or provide access to entertainment content and other information through various types of media. Consumer Discretionary: companies that provide goods and services that people want but don’t necessarily need, such as televisions, cars, and sporting goods; these businesses tend to be the most sensitive to economic cycles. Consumer Staples:companies that provide goods and services that people use on a daily basis, like food, household products, and personal-care products; these businesses tend to be less sensitive to economic cycles. Energy: companies whose businesses are dominated by either of the following activities: the construction or provision of oil rigs, drilling equipment, or other energy-related services and equipment, including seismic data collection; or the exploration, production, marketing, refining, and/or transportation of oil and gas products, coal, and consumable fuels. Financials: companies involved in activities such as banking, consumer finance, investment banking and brokerage, asset management, and insurance and investments. Health Care: companies in two main industry groups: health care equipment suppliers and manufacturers, and providers of health care services; and companies involved in the research, development, production, and marketing of pharmaceuticals and biotechnology products. Industrials: companies whose businesses manufacture and distribute capital goods, provide commercial services and supplies, or provide transportation services. Materials: companies that are engaged in a wide range of commodity-related manufacturing. Real Estate: companies in two main industry groups—real estate investment trusts (REITs), and real estate management and development companies. Technology: companies in technology software and services and technology hardware and equipment. Utilities: companies considered to be electric, gas, or water utilities, or companies that operate as independent producers and/or distributors of power.

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