Fidelity® Disruptors ETF
 
 
Semi-Annual Report
November 30, 2023

Contents

Investment Summary

Schedule of Investments

Financial Statements

Notes to Financial Statements

Shareholder Expense Example

Board Approval of Investment Advisory Contracts

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You may also call 1-800-FIDELITY 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. © 2024 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.
 
Investment Summary November 30, 2023 (Unaudited)
The information in the following tables is based on the direct Investments of the Fund.
Top Holdings (% of Fund's net assets)
 
Fidelity Disruptive Communications ETF
21.3
 
Fidelity Disruptive Technology ETF
21.1
 
Fidelity Disruptive Finance ETF
21.0
 
Fidelity Disruptive Automation ETF
18.4
 
Fidelity Disruptive Medicine ETF
18.1
 
Fidelity Cash Central Fund 5.40%
0.3
 
 
100.2
 
 
Asset Allocation (% of Fund's net assets)
Net Other Assets (Liabilities) - (0.2)%
 
Schedule of Investments November 30, 2023 (Unaudited)
 
Showing Percentage of Net Assets
Domestic Equity Funds - 99.9%
 
 
Shares
Value ($)
 
Fidelity Disruptive Automation ETF (a)
 
669,660
15,951,294
Fidelity Disruptive Communications ETF (a)(b)
 
668,031
18,501,179
Fidelity Disruptive Finance ETF (a)
 
676,449
18,230,305
Fidelity Disruptive Medicine ETF (a)(b)
 
731,298
15,730,225
Fidelity Disruptive Technology ETF (a)(b)
 
679,849
18,281,136
 
TOTAL DOMESTIC EQUITY FUNDS
 (Cost $80,564,106)
 
 
86,694,139
 
 
 
 
Short-Term Funds - 0.3%
 
 
Shares
Value ($)
 
Fidelity Cash Central Fund 5.40% (c)
 
 (Cost $231,420)
 
 
231,373
231,420
 
 
 
 
 
TOTAL INVESTMENT IN SECURITIES - 100.2%
 (Cost $80,795,526)
 
 
 
86,925,559
NET OTHER ASSETS (LIABILITIES) - (0.2)%  
(139,894)
NET ASSETS - 100.0%
86,785,665
 
 
 
 
Security Type Abbreviations
ETF
-
EXCHANGE-TRADED FUND
 
Legend
 
(a)
Affiliated Fund
 
(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 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.
 
 
Affiliate
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 5.40%
-
2,296,732
2,065,312
8,412
-
-
231,420
0.0%
Total
-
2,296,732
2,065,312
8,412
-
-
231,420
 
 
 
 
 
 
 
 
 
 
Amounts in the dividend 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.
 
Amounts included in the purchases and sales proceeds columns may include in-kind transactions, if applicable.
 
Affiliated Underlying Funds
Fiscal year to date information regarding the Fund's investments in affiliated Underlying Funds is presented below. Exchanges between classes of the same affiliated Underlying Funds may occur. If an Underlying Funds changes its name, the name presented below is the name in effect at period end.
Affiliate
Value,
beginning
of period ($)
Purchases ($)
Sales
Proceeds ($)
Dividend
Income ($)
Realized
Gain (loss) ($)
Change in
Unrealized
appreciation
(depreciation) ($)
Value,
end
of period ($)
Fidelity Disruptive Automation ETF
19,063,965
14,473,427
2,419,039
65,754
528,276
(1,267,849)
15,951,294
Fidelity Disruptive Communications ETF
19,096,640
20,044,285
3,019,959
-
17,692
2,271,051
18,501,179
Fidelity Disruptive Finance ETF
18,203,265
18,836,171
2,885,515
136,437
259,479
1,649,410
18,230,305
Fidelity Disruptive Medicine ETF
18,733,959
20,500,945
2,391,640
-
(76,990)
(2,022,916)
15,730,225
Fidelity Disruptive Techology ETF
20,318,052
18,511,060
4,099,187
-
(155,133)
2,007,747
18,281,136
 
95,415,881
92,365,888
14,815,340
202,191
573,324
2,637,443
86,694,139
 
Amounts in the dividend 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.
Amounts included in the purchases and sales proceeds columns may include in-kind transactions, if applicable.
 
Investment Valuation
 
The following is a summary of the inputs used, as of November 30, 2023, 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:
 
 
 
 
 Domestic Equity Funds
86,694,139
86,694,139
-
-
  Short-Term Funds
231,420
231,420
-
-
 Total Investments in Securities:
86,925,559
86,925,559
-
-
Financial Statements (Unaudited)
Statement of Assets and Liabilities
 
 
 
November 30, 2023
(Unaudited)
 
 
 
 
 
Assets
 
 
 
 
Investment in securities, at value  - See accompanying schedule:
 
 
 
 
Fidelity Central Funds (cost $231,420)
$
231,420
 
 
Other affiliated issuers (cost $80,564,106)
86,694,139
 
 
 
 
 
 
 
 
 
 
 
 
Total Investment in Securities (cost $80,795,526)
 
 
$
86,925,559
Receivable for investments sold
 
 
758,617
Distributions receivable from Fidelity Central Funds
 
 
1,025
  Total assets
 
 
87,685,201
Liabilities
 
 
 
 
Payable for investments purchased
$
899,536
 
 
  Total Liabilities
 
 
 
899,536
Net Assets  
 
 
$
86,785,665
Net Assets consist of:
 
 
 
 
Paid in capital
 
 
$
94,998,406
Total accumulated earnings (loss)
 
 
 
(8,212,741)
Net Assets
 
 
$
86,785,665
Net Asset Value, offering price and redemption price per share ($86,785,665 ÷ 3,525,062 shares)
 
 
$
24.62
Statement of Operations
 
 
 
Six months ended
November 30, 2023
(Unaudited)
Investment Income
 
 
 
 
Dividends:
 
 
 
 
 Affiliated issuers
 
 
$
202,191
Income from Fidelity Central Funds  
 
 
8,412
 Total Income
 
 
 
210,603
Expenses
 
 
 
 
Management fee
$
24,042
 
 
Independent trustees' fees and expenses
245
 
 
 Total expenses before reductions
 
24,287
 
 
 Expense reductions
 
(24,033)
 
 
 Total expenses after reductions
 
 
 
254
Net Investment income (loss)
 
 
 
210,349
Realized and Unrealized Gain (Loss)
 
 
 
 
Net realized gain (loss) on:
 
 
 
 
 Investment Securities:
 
 
 
 
   Redemptions in-kind
 
1,332,620
 
 
   Affiliated issuers
 
(759,296)
 
 
Total net realized gain (loss)
 
 
 
573,324
Change in net unrealized appreciation (depreciation) on:
 
 
 
 
 Investment Securities:
 
 
 
 
   Affiliated issuers
 
2,637,443
 
 
Total change in net unrealized appreciation (depreciation)
 
 
 
2,637,443
Net gain (loss)
 
 
 
3,210,767
Net increase (decrease) in net assets resulting from operations
 
 
$
3,421,116


See Organization and Merger information note regarding reorganization from mutual fund to exchange traded fund.
Statement of Changes in Net Assets
 
 
Six months ended
November 30, 2023
(Unaudited)
 
Year ended
May 31, 2023
Increase (Decrease) in Net Assets
 
 
 
 
Operations
 
 
 
Net investment income (loss)
$
210,349
$
(438,548)
Net realized gain (loss)
 
573,324
 
 
(11,203,876)
 
Change in net unrealized appreciation (depreciation)
 
2,637,443
 
14,746,550
 
Net increase (decrease) in net assets resulting from operations
 
3,421,116
 
 
3,104,126
 
Distributions to shareholders
 
(204,878)
 
 
-
 
 
 
 
 
 
Share transactions - net increase (decrease)
 
-
 
 
(33,405,540)
 
Share transactions
 
 
 
 
Proceeds from sales of shares
 
619,060
 
-
Cost of shares redeemed
 
(12,458,404)
 
-
 
 
 
 
 
  Net increase (decrease) in net assets resulting from share transactions
 
(11,839,344)
 
 
(33,405,540)
 
Total increase (decrease) in net assets
 
(8,623,106)
 
 
(30,301,414)
 
 
 
 
 
 
Net Assets
 
 
 
 
Beginning of period
 
95,408,771
 
125,710,185
 
End of period
$
86,785,665
$
95,408,771
 
 
 
 
 
Other Information
 
 
 
 
Shares
 
 
 
 
Sold
 
25,397
 
4,434,170
Redeemed
 
(527,857)
 
(6,032,531)
Net increase (decrease)
 
(502,460)
 
(1,598,361)
 
 
 
 
 
See Organization and Merger information note regarding reorganization from mutual fund to exchange traded fund.
 
Share activity amounts in the Other Information section have been adjusted to reflect the impact of the change in capital structure associated with the merger. All financial information prior to the merger is that of the Predecessor Fund.
 
Financial Highlights
Fidelity® Disruptors ETF
 
 
Six months ended
(Unaudited) November 30, 2023 A
 
Years ended May 31, 2023 A
 
2022 A
 
2021 A
 
2020 A,B
  Selected Per-Share Data 
 
 
 
 
 
 
 
 
 
 
  Net asset value, beginning of period
$
23.69
$
22.31
$
29.44
$
20.17
$
17.43
  Income from Investment Operations
 
 
 
 
 
 
 
 
 
 
     Net investment income (loss) C,D
 
.06
 
(.10)
 
(.21)
 
(.21)
 
(.02)
     Net realized and unrealized gain (loss)
 
.93
 
1.48
 
(6.54)
 
9.67
 
2.76
  Total from investment operations
 
.99  
 
1.38  
 
(6.75)  
 
9.46  
 
2.74
  Distributions from net investment income
 
(.06)
 
-
 
-
 
-
 
-
  Distributions from net realized gain
 
-
 
-
 
(.38)
 
(.19)
 
-
     Total distributions
 
(.06)
 
-
 
(.38)
 
(.19)
 
-
  Net asset value, end of period
$
24.62
$
23.69
$
22.31
$
29.44
$
20.17
 Total Return E,F,G
 
4.17%
 
6.17%
 
(23.29)%
 
46.99%
 
15.70%
 Ratios to Average Net Assets D,H,I
 
 
 
 
 
 
 
 
 
 
    Expenses before reductions
 
.05% J
 
.90%
 
1.00%
 
1.01% K
 
1.01% J,K
    Expenses net of fee waivers, if any
 
-% J,L
 
.82%
 
1.00%
 
1.01% K
 
1.01% J,K
    Expenses net of all reductions
 
-% J,L
 
.82%
 
1.00%
 
1.01% K
 
1.01% J,K
    Net investment income (loss)
 
.47% J
 
(.50)%
 
(.69)%
 
(.77)%
 
(1.01)% J
 Supplemental Data
 
 
 
 
 
 
 
 
 
 
    Net assets, end of period (000 omitted)
$
86,786
$
95,409
$
48,579
$
141,385
$
19,310
    Portfolio turnover rate M
 
4% J,N
 
12%
 
22%
 
3%
 
-% O
 
AAs further described in Organization and Merger information notes, per share amounts have been adjusted to reflect the impact of the change in capital structure associated with the merger. All financial information prior to the merger is that of the Predecessor Fund.
 
BFor the period April 16, 2020 (commencement of operations) through May 31, 2020.
 
CCalculated based on average shares outstanding during the period.
 
DNet 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 mutual funds or ETFs is not included in the Fund's net investment income (loss) ratio.
 
ETotal returns for periods of less than one year are not annualized.
 
FTotal returns would have been lower if certain expenses had not been reduced during the applicable periods shown.
 
GBased on net asset value.
 
HExpense 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.
 
IFees 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.
 
JAnnualized.
 
KThe size and fluctuation of net assets and expense amounts may cause ratios to differ from contractual rates.
 
LAmount represents less than .005%.
 
MAmount does not include the portfolio activity of any underlying mutual funds or exchange-traded funds (ETFs).
 
NPortfolio turnover rate excludes securities received or delivered in-kind.
 
OAmount not annualized.
 
Notes to Financial Statements (Unaudited)
For the period ended November 30, 2023
 
1. Organization.
Fidelity Disruptors ETF (the Fund) is an exchange-traded fund of Fidelity Covington Trust (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.
 
Effective June 16, 2023, Fidelity Disruptors Fund (Predecessor Fund) reorganized into the newly created Fidelity Disruptors ETF. The Predecessor Fund was the accounting survivor in the reorganization, and, as such, the financial statements and financial highlights of the Fund reflects the financial information of the Predecessor Fund through June 16, 2023 (see Merger Information note). During the prior fiscal year, Loyalty Class 1 and Loyalty Class 2 shares were converted to Fidelity Disruptors Fund shares in the Predecessor Fund.
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 RatioA
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 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 designated the Fund's investment adviser as the valuation designee responsible for the fair valuation function and performing fair value determinations as needed. The investment adviser has established a Fair Value Committee (the Committee) to carry out the day-to-day fair valuation responsibilities and has adopted policies and procedures to govern the fair valuation process and the activities of the Committee. In accordance with these fair valuation policies and procedures, which have been approved by the Board, the Fund attempts to obtain prices from one or more third party pricing services 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 the policies and procedures. Factors used in determining fair value vary by investment type and may include market or investment specific events, transaction data, estimated cash flows, and market observations of comparable investments. The frequency that the fair valuation procedures are used cannot be predicted and they may be utilized to a significant extent. The Committee manages the Fund's fair valuation practices and maintains the fair valuation policies and procedures. The Fund's investment adviser reports to the Board information regarding the fair valuation process and related material matters. 
 
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:
 
Exchange-Traded Funds (ETFs) are valued at their last sale price or official closing price as reported by a third party pricing service 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 but the exchange reports a closing bid level, ETFs are valued at the closing bid and would be categorized as Level 1 in the hierarchy. In the event there was no closing bid, ETFs may be valued by another method that the Board believes reflects fair value in accordance with the Board's fair value pricing policies and may be categorized as Level 2 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 November 30, 2023 is included at the end of the Fund's Schedule of Investments.
 
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 (normally 4:00 p.m. Eastern time) of the Nasdaq Stock Market 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. Income and capital gain distributions from any underlying mutual funds or exchange-traded funds (ETFs) are recorded on the ex-dividend date.
 
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. 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.
 
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.
 
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 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:
 
Gross unrealized appreciation
$9,046,680
Gross unrealized depreciation
(3,288,869)
Net unrealized appreciation (depreciation)
$5,757,811
Tax cost
$81,167,748
 
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.
 
 Short-term
$(5,351,923)
 Long-term
(8,928,765)
Total capital loss carryforward
$(14,280,688)
The Fund elected to defer to its next fiscal year $249,218 of ordinary losses recognized during the period January 1, 2023 to May 31, 2023.
 
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 Disruptors ETF
92,365,888
14,815,340
 
Securities received and delivered in-kind through subscriptions and redemptions are noted in the table below.
 
 
In-Kind Subscriptions ($)
In-Kind Redemptions ($)
Fidelity Disruptors ETF
-
6,789,450
 
5. Fees and Other Transactions with Affiliates.
Management Fee. Fidelity Management & Research Company LLC (the investment adviser) provides the Fund with investment management related services. The Fund does not pay any fees for these services. Under the management contract, the investment adviser pays all expenses, except the compensation of the independent Trustees and certain miscellaneous expenses such as proxy and shareholders meeting expenses.
 
During the period June 1, 2023 through June 16, 2023, the Predecessor Fund paid a monthly all-inclusive management fee that was based on an annual rate of the Predecessor Fund's average net assets as noted in the table below. Under the management contract, the investment adviser paid all other expenses, except the compensation of the independent Trustees and certain miscellaneous expenses such as proxy and shareholder meeting expenses. Under a separate expense contract, the investment adviser paid all other operating expenses as necessary, except the compensation of the independent Trustees and certain miscellaneous expenses, such as proxy and shareholder meeting expenses, so that total expenses of the Predecessor Fund did not exceed an annual percentage of average net assets as noted in the table below.
 
 
Management Fee Annual % of Average Net Assets
Expense Contract Annual % of Average Net Assets
Fidelity Disruptors Fund
1.00%
.50%
 
 
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. During the period, there were no interfund trades.
6. Committed Line of Credit.
During the period June 1, 2023 through June 16, 2023, the Predecessor Fund participated 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 commitment fees on the pro-rata portion of the line of credit were borne by the investment adviser. During the period, there were no borrowings on this line of credit.
7. Expense Reductions.
During the period June 1, 2023 through June 16, 2023, the investment adviser voluntarily agreed to waive the Predecessor Fund's management fee as follows:
 
 
Management Fee Waiver Annual % of Average Net Assets
Management Fee Waiver
Fidelity Disruptors Fund
.50%
$24,025
 
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 by $8.
8. Share Transactions.
Funds issue and redeem shares at NAV only with certain authorized participants in large increments known as Creation Units. Purchases of Creation Units are made by tendering a basket of designated securities to a fund and redemption proceeds are paid with a basket of securities from a fund's portfolio with a balancing cash component to equate the market value of the basket of securities delivered or redeemed to the NAV per Creation Unit on the transaction date. Cash may be substituted equivalent to the value of certain securities generally when they are not available in sufficient quantity for delivery. A fund's shares are available in smaller increments to investors in the secondary market at market prices and may be subject to commissions. Authorized participants pay a transaction fee to the shareholder servicing agent when purchasing and redeeming Creation Units of a fund. The transaction fee is used to offset the costs associated with the issuance and redemption of Creation Units.
 
Prior fiscal year share transactions for each class of the Predecessor Fund were as follows and may contain in-kind transactions, automatic conversions between classes or exchanges between affiliated funds:
 
 
Shares
Dollars
 
Year ended
 May 31, 2023
Year ended
 May 31, 2023
Fidelity Disruptors Fund
 
 
Fidelity Disruptors Fund
 
 
Shares sold
3,703,937
$84,461,331
Reinvestment of distributions
-
-
Shares redeemed
(1,852,955)
(38,815,504)
Net increase (decrease)
1,850,982
$45,645,827
Loyalty Class 1
 
 
Shares sold
730,233
$15,839,358
Reinvestment of distributions
-
-
Shares redeemed
(4,173,700)
(94,754,589)
Net increase (decrease)
(3,443,467)
$(78,915,231)
Loyalty Class 2
 
 
Reinvestment of distributions
-
-
Shares redeemed
(5,876)
(136,136)
Net increase (decrease)
(5,876)
$(136,136)
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. Merger Information.
On June 16, 2023 the Fidelity Disruptors Fund (Predecessor Fund) reorganized into a newly created Fidelity Disruptors ETF (ETF) pursuant to an Agreement and Plan of Reorganization (the Agreement) approved by its Board of Trustees. Per the Agreement, shareholders of the Predecessor Fund received ETF shares equal in value to the shares of the Predecessor Fund they owned on the day the reorganization was effective. The Predecessor Fund was the accounting survivor after the reorganization. As such, performance and financial history prior to the reorganization is that of the Predecessor Fund. Historical share transactions and per share information for the Predecessor Fund was retroactively adjusted to reflect the change in capital structure due to the reorganization.
 
For financial reporting purposes, the assets and liabilities of the Predecessor Fund and shares issued by the ETF were recorded at fair value; however, the cost basis of the investments received from the Predecessor Fund were carried forward and will be utilized for purposes of the ETF'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. Costs incurred in connection with the reorganization were paid by the Predecessor Fund.
 
Predecessor Fund/Accounting Survivor
Investments ($)
Unrealized appreciation (depreciation) ($)
Net Assets ($)
Shares Exchanged
Shares Exchanged Ratio
 
 
 
 
 
 
Fidelity Disruptors Fund
98,438,042
8,954,987
98,615,698
3,944,631
.5736680000
 
Legal Acquiring ETF
Net Assets ($)
Total net assets after the acquisition ($)
Fidelity Disruptors ETF
25
98,615,723
 
Pro forma results of operations of the combined entity for the entire period ended November 30, 2023, 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)
$210,276
Total net realized gain (loss)
573,324
Total change in net unrealized appreciation (depreciation)
2,637,443
Net increase (decrease) in net assets resulting from operations
$3,421,043
 
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 Predecessor Fund that has been included in the ETF's Statement of Operations since June 16, 2023.
11. Risk and Uncertainties.
Many factors affect a fund's performance. Developments that disrupt global economies and financial markets, such as pandemics, epidemics, outbreaks of infectious diseases, war, terrorism, and environmental disasters, may significantly affect a fund's investment performance. The effects of these developments to a fund will be impacted by the types of securities in which a fund invests, the financial condition, industry, economic sector, and geographic location of an issuer, and a fund's level of investment in the securities of that issuer. Significant concentrations in security types, issuers, industries, sectors, and geographic locations may magnify the factors that affect a fund's performance.
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 (June 1, 2023 to November 30, 2023).
 
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 June 1, 2023
 
Ending Account Value November 30, 2023
 
Expenses Paid During Period- C June 1, 2023 to November 30, 2023
 
 
 
 
 
 
 
 
 
 
Fidelity® Disruptors ETF
 
 
 
-%-D
 
 
 
 
 
 
Actual
 
 
 
 
 
$ 1,000
 
$ 1,041.70
 
$-E
 
Hypothetical-B
 
 
 
 
 
$ 1,000
 
$ 1,025.00
 
$-E
 
 
A   Annualized expense ratio reflects expenses net of applicable fee waivers.
 
B   5% return per year before expenses
 
C   Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 183/ 366 (to reflect the one-half year period). The fees and expenses of any Underlying Funds are not included in each annualized expense ratio.
D   Amount represents less than .005%.
 
E   Amount represents less than $.005.
 
 
 
 
 
Board Approval of Investment Advisory Contracts
 
Board Approval of Investment Advisory Contracts and Management Fees
Fidelity® Disruptors ETF
At the November 2022 and January 2023 meetings, the Board of Trustees, including the Independent Trustees (together, the Board), voted to approve the management contract with Fidelity Management & Research Company LLC (FMR) and the sub-advisory agreements with affiliates of FMR (together, the Advisory Contracts) for the fund. FMR and the sub-advisers are collectively referred to herein as the Investment Advisers. The Board, assisted by the advice of fund counsel and Independent Trustees' counsel, considered a broad range of information.
 
Nature, Extent, and Quality of Services Provided. The Board considered Fidelity's staffing as it relates to the fund, including the backgrounds of investment personnel of Fidelity, and also considered the fund's investment objective, strategies, and related investment philosophy. The Board considered the structure of the investment personnel compensation program and whether this structure provides appropriate incentives to act in the best interests of the fund.
 
Resources Dedicated to Investment Management and Support Services. The Board and the Fund Oversight and Research Committees reviewed the general qualifications and capabilities of Fidelity's investment staff, including its size, education, experience, and resources, as well as Fidelity's approach to recruiting, training, managing, and compensating investment personnel. The Board noted that Fidelity has continued to increase the resources devoted to non-U.S. offices, including expansion of Fidelity's global investment organization. The Board also noted that Fidelity's analysts have extensive resources, tools and capabilities that allow them to conduct sophisticated quantitative and fundamental analysis, as well as credit analysis of issuers, counterparties and guarantors. Further, the Board considered that Fidelity's investment professionals have sufficient access to global information and data so as to provide competitive investment results over time, and that those professionals also have access to sophisticated tools that permit them to assess portfolio construction and risk and performance attribution characteristics continuously, as well as to transmit new information and research conclusions rapidly around the world. Additionally, in its deliberations, the Board considered Fidelity's trading, risk management, compliance, and technology and operations capabilities and resources, which are integral parts of the investment management process. The Board also considered Fidelity's investments in business continuity planning, and its success in continuously providing services to the Fidelity funds notwithstanding the severe disruptions caused by the COVID-19 pandemic.
 
Shareholder and Administrative Services. The Board considered the nature, extent, quality, and cost of advisory, administrative, and shareholder services to be performed by the Investment Advisers and their affiliates under the Advisory Contracts and under separate agreements covering pricing and bookkeeping, and securities lending services for the fund. The Board also considered the nature and extent of the supervision of third party service providers, principally transfer agent, custodians, subcustodians, and pricing vendors.
 
The Board noted that the growth of fund assets over time across the complex allows Fidelity to reinvest in the development of services designed to enhance the value and convenience of the Fidelity funds as investment vehicles. These services include 24-hour access to account information and market information over the Internet and through telephone representatives, investor education materials and asset allocation tools, and the expanded availability of Fidelity Investor Centers.
 
Investment Performance. The fund will commence operations by acquiring the assets of the relevant acquired fund, and the fund is to be the accounting survivor to the relevant acquired fund. Therefore, the Trustees were provided with performance information for the relevant acquired fund. The Board considered the Investment Advisers' strength in fundamental, research-driven security selection, which the Board is familiar with through its supervision of other Fidelity funds.
 
Based on its review, the Board concluded that the nature, extent, and quality of services to be provided to the fund under the Advisory Contracts should benefit the shareholders of the fund.
 
Competitiveness of Management Fee and Total Expense Ratio. In reviewing the Advisory Contracts, the Board considered the fund's all-inclusive fee rate. The Board also considered other expenses, such as transfer agent fees, pricing and bookkeeping fees, and custodial, legal, and audit fees, paid by FMR under the all-inclusive arrangement. The Board noted that the fund's proposed management fee rate is below the median fee rate of funds with similar Lipper investment objective categories and comparable investment mandates, regardless of whether their management fee structures are comparable. The Board also considered that the projected total expense ratio of the fund is below the median of those funds and classes used by the Board for management fee comparisons.
 
Based on its review, the Board concluded that the fund's management fee and projected total expense ratio were reasonable in light of the services that the fund and its shareholders will receive and the other factors considered.
 
Costs of the Services and Profitability. The fund will commence operations by acquiring the assets of the relevant acquired fund, and the fund is to be the accounting survivor to the relevant acquired fund. The revenue, cost, or profitability data for the relevant acquired fund was available for the Board to review in respect of the fund.
 
Economies of Scale. The Board considered economies of scale based on the operating experience of the relevant acquired fund to permit assessment thereof. It noted that, notwithstanding the entrepreneurial risk associated with converting a mutual fund into an exchange-traded fund, the management fee for the fund was set at a level normally associated, by comparison with competitors, with very high fund net assets. The Board also considered Fidelity's assertion that the level of the fund's fee anticipated economies of scale at lower asset levels even before, if ever, economies of scale are achieved. The Board also noted that the fund and its shareholders would have access to the very considerable number and variety of services available through Fidelity and its affiliates. The Board concluded that, because the fund will pay no management fee and FMR or an affiliate will bear all expenses of the fund, with limited exceptions, economies of scale cannot be realized by this fund.
 
Based on its evaluation of all of the conclusions noted above, and after considering all factors it believed relevant, the Board concluded that the advisory fee arrangements are fair and reasonable, and that the fund's Advisory Contracts should be approved.
 
1.9910204.100
DRE-SANN-0124